Forex - EUR/USD hits fresh session lows after U.S. retail sales

The euro hit fresh session lows against the dollar on Wednesday after official data showed that U.S. retail sales rose more-than-expected in February, reinforcing optimism over the country’s economic recovery.

EUR/USD hit 1.2963 during European afternoon trade, the pair’s lowest since March 8; the pair subsequently consolidated at 1.2965, shedding 0.53%.

The pair was likely to find support at 1.2885, the low of December 10 and resistance at 1.3063, the session high.

The Commerce Department said U.S. retail sales rose 1.1% in February, beating expectations for a 0.5% increase. 

Core retail sales, which exclude automobile sales, also rose more-than-expected, climbing 1.0% compared to expectations for a 0.2% gain. 

The data fuelled optimism that the recovery in the U.S. is gaining traction after data last week showed that the economy added more jobs than expected in February, bringing the unemployment rate to a four-year low of 7.7%.

The euro remained under pressure after Italy saw the yield on three-year bonds rise to the highest level since December at the first auction of the country’s debt since a one-notch downgrade by Fitch’s ratings agency last week in the wake of inconclusive elections.

Italy’s Treasury sold EUR3.32 billion worth of three-year government bonds at an average yield of 2.48%, up from 2.30% at a similar auction last month.

The yield on the 15-year bond rose to 4.90% from 4.80% in January.

The euro fell to session lows against the pound and the yen, withEUR/GBP down 0.72% to 0.8682 and EUR/JPY falling 0.64% to 124.40.

Earlier Wednesday, official data showed that industrial production in the euro zone fell 0.4% in January from December, more than expectations for a 0.1% decline. 

The weaker-than-expected data underlined concerns over the economic outlook for the region.

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