In the currency markets, Tuesday was a day of huge swings. These shifts were largely due to worse-than-expected retail sales data in the US and increasing conflict in the Middle East. The EUR/USD cross was stuck around the 1.1550 level throughout the American session. At the same time, GBP/USD struggled to hold above the 1.3600 level.
As for EUR/USD, during recent trading the pair was marginally higher after US retail sales came in weaker than expected. The pair remained anchored close to 1.1550, hardly leaving an impression on the markets. After that, it climbed steadily northward as investors cheered the latest economic data. This change was propelled by the weak demand for the US Dollar. Consequently, the Euro became relatively more attractive in the midst of uncertainty.
GBP/USD remained capped below the important figure of 1.3600. This decline was fueled by a nervous decisive market sentiment, very much affected by geopolitical matters in the Middle East. With GBP/USD being the most active trade, traders were reluctant to take big positions. The currency had a hard time due to the effects of the retail sales number plus the general market mood. The pair’s failure to break through the 1.3600 level is reflective of the broader difficult landscape for the British Pound.
The US retail sales data, which missed the mark by a wide margin, painted a gloomy picture to depress the buck. Analysts pointed out that this underperformance made the dollar even more unattractive given the already present market fears. Investors are becoming more nervous about the possible ramifications of escalating tensions in the Middle East. This environment has made trading decisions more difficult and eroded market confidence broadly.
Investors are reacting cautiously to the retail sales report and the latest on the Gaza conflict. While they do so, both EUR/USD and GBP/USD are highly vulnerable to any shift in sentiment. Weak underlying demand for USD continues to wear on these currency pairs. Traders are betting on how long this state of affairs will last as the mood in the country remains murky.