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Forex - EUR/USD gains on disappointing U.S. retail sales

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Shutterstock photo - - The euro gave back earlier gains against the dollar on Wednesday after profit taking wiped out gains stemming from soft U.S. retail sales figures.

In U.S. trading, EUR/USD was down 0.06% at 1.3361, up from a session low of 1.3342 and off a high of 1.3415.

The pair was likely to find support at 1.3336, Tuesday's low, and resistance at 1.3433, last Friday's high.

The dollar headed south earlier after the Commerce Department reported that U.S. retail sales came in flat last month, disappointing market expectations for a 0.2% increase.

Core retail sales, which exclude auto sales, rose just 0.1% in July, below expectations for a 0.4% gain.

The numbers softened the dollar by reminding investors that the Federal Reserve won't rush to raise interest rates after it closes its monthly bond-buying program, which is seen taking place in October.

The euro, meanwhile, saw headwinds of its own, which allowed for profit taking that sent the single currency dipping into negative territory.

Eurostat, the European Union's statistical office, reported earlier that industrial output in the euro area contracted 0.3% in June. It was the second consecutive monthly decline and confounded expectations for a 0.3% expansion.

The report came one day after data showed that German economic sentiment deteriorated sharply this month, falling to a 20 month low, largely due to geopolitical tensions.

Elsewhere, the euro was up against the pound, with EUR/GBP up 0.67% at 0.8005, and up against the yen, with EUR/JPY up 0.19% at 136.98.

The pound came under broad pressure after the Bank of England cut its forecast for wage growth to 1.25% from 2.5% in 2014, before picking up to 3.25% in 2015.

The bank reiterated that when rates do start to rise they will do so a "small, slow" manner.

Separately, the Office of National Statistics reported that average earnings, excluding bonuses, rose by just 0.6% in the three months to June, missing market calls for a 0.07% ratings.

Including bonuses, pay packets contracted by 0.2% during the quarter, the first decrease since 2009 and more than consensus forecasts for a 0.1% contraction.

The U.K. unemployment rate fell to 6.4% in the quarter, in line with expectations and down from 6.5% in May.

The number of people claiming unemployment benefits fell by 33,600 last month, beating expectations for a decline of 30,000. June's figure was revised to a drop of 39,500 from 36,300 previously.

On Thursday, the euro zone is to publish preliminary data on gross domestic product, in addition to revised data on consumer price inflation.

The U.S. is to release the weekly report on initial jobless claims. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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