Forex News
- EUR/USD retraces Monday's gains on Tuesday, pulling back to 1.1385.
- The Euro has been unfazed by the unexpected increase in German Retail Consumption.
- Markets are on a wait-and-see stance ahead of a string of key US employment releases.
The Euro (EUR) is trimming recent gains against the US Dollar (USD) on Monday, trading at 1.1385 at the time of writing after being rejected near 1.1430. This leaves the pair close to yearly lows, on track to end June with a nearly 2.30% decline, its weakest monthly performance since July last year.
The pair has been unfazed by the upbeat German Retail Sales report, which showed a 1.1% increase in May, following a downwardly revised 0.4% decline in April, and beat expectations of a 0.1% contraction. In the twelve months to May, retail consumption rose 1.8%, following a 0.6% drop in April, according to data released by Destatis on Tuesday.
Fed hiking bets are buoying the US Dollar
The US Dollar, on the other hand, remains bid, buoyed by market hopes that the US Federal Reserve (Fed) might hike interest rates as soon as September. Recent macroeconomic data has revived the narrative of US exceptionalism in a context of high inflationary pressures stemming from Iran’s war, which has prompted the central bank to adopt a more hawkish stance.
Beyond that, the US Supreme Court has refuted US President Donald Trump’s attempt to fire Fed Governor Lisa Cook, curbing doubts about the central bank’s independence.
FX volatility, however, remains subdued with investors awaiting a string of key US employment indicators that might determine the Fed’s rate hike calendar. The focus on Tuesday will be on the JOLTS Job Openings data, although the highlight of the week is Thursday’s Nonfarm Payrolls (NFP) report. June’s payrolls are expected to show an 110K increase in net employment, after 172K in May, to confirm that the US economy keeps creating employment at a solid pace.
On the geopolitical front, news reports that US and Iranian negotiators are in Doha to resume peace talks, although it is unclear when they will meet. Markets nevertheless remain hopeful of a negotiated outcome of the conflict, which is keeping Oil prices at pre-war levels and providing some support to the Euro.
Economic Indicator
Retail Sales (MoM)
The Retail Sales released by the Statistisches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending. The positive economic growth usually anticipates "Bullish" for the EUR, while a low reading is seen as negative, or bearish, for the EUR.
Read more.Last release: Tue Jun 30, 2026 06:00
Frequency: Monthly
Actual: 1.1%
Consensus: -0.1%
Previous: -0.3%
Source:
Economic Indicator
Retail Sales (YoY)
The Retail Sales released by the Statistisches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending. The positive economic growth anticipates "Bullish" for the EUR, while a low reading is seen as negative, or bearish, for the EUR.
Read more.Last release: Tue Jun 30, 2026 06:00
Frequency: Monthly
Actual: 1.8%
Consensus: 0%
Previous: -0.3%
Source: Federal Statistics Office of Germany
United Overseas Bank’s (UOB) Quek Ser Leang notes that AUD/USD remains under mild pressure, with intraday bias tilted lower after a narrow range session. Any decline is expected to stay within 0.6865–0.6900, with a clear break below 0.6865 seen as unlikely. Over 1–3 weeks, a move above 0.6940 would negate downside targets, while the broader trend still points toward 0.6707.
Australian Dollar stays under mild pressure
"24-HOUR VIEW: Yesterday, we indicated that AUD “is likely to trade in a range between 0.6880 and 0.6920.” AUD then traded within a narrower range of 0.6878/0.6904, closing largely unchanged at 0.6886 (-0.06%). While the slight increase in downward momentum tilts the bias toward the downside today, any decline is likely to be contained within a 0.6865/0.6900 range. AUD is unlikely to break clearly below 0.6865."
"1-3 WEEKS VIEW: After holding a negative AUD view for more than a week, we highlighted the following yesterday (29 Jun, spot at 0.6895): “Downward momentum is starting to ease. A break above 0.6940 (‘strong resistance’ was at 0.6950 last Friday) would indicate that 0.6835 is out of reach.” We continue to hold the same view for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
German Retail Sales, a key measure of consumer spending, showed a surprise upside in May. The consumer spending measure rose 1.1% month-on-month (MoM), according to official data released by Destatis, while it was expected to have declined 0.1%. In April, Retail Sales fell by 0.4% (revised from -0.3%)
On an annualized basis, Retail Sales climbed 1.8% in May, compared to the prior release of a 0.6% fall (revised from -0.3%). This figure came in above the market consensus of 0%.
Market reaction
No immediate reaction was observed in the Euro (EUR) after the data release. As of writing, the EUR/USD pair is down 0.31% on the day at 1.1386.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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