EUR/USD aims to recapture weekly lows at 1.0630 ahead of US NFP and eurozone Retail Sales

• EUR/USD is expected to decline towards 1.0627 as DXY rebounded on upbeat PMI data.
• Mounting inflationary pressures in eurozone are compelling for a rate hike announcement by the ECB.
• The annual eurozone Retail Sales may climb to 5.4%, higher than the former figure of 0.8%.

The EUR/USD pair is juggling around 1.0650 after a sheer downside move from 1.0730 on Thursday. A sluggish consolidation move is indicating the occurrence of an intensive selling action, which will expose the asset to more downside.

The pair has displayed a vulnerable performance in the last two trading sessions after a firmer rebound in the US dollar index (DXY). Rising odds of an extreme hawkish monetary policy dictation by the Federal Reserve (Fed) in its June monetary policy and the upbeat US ISM Manufacturing PMI were sufficient to bring bulls back into the counter. The US ISM PMI landed at 56.1, higher than the forecasts of 54.5 and the prior print of 55.4.

On the euro front, the chances of the first rate hike announcement by the European Central Bank (ECB) taking into account the inflationary pressures have been bolstered. The eurozone Harmonized Index of Consumer Prices (HICP) landed at 8.1% vs. the expectation of 7.7% and the prior print of 7.4%.  A significant upside in the inflation numbers in Europe is compelling for an end of the lower rates cycle and the ECB will feature rate hikes in its upcoming monetary policy meetings.

Going forward, investors will focus on the release of the US Nonfarm Payrolls (NFP), which is seen at 325k against the prior print of 428k. Meanwhile, eurozone will report the Retail Sales on Friday. As per the market consensus, the annual Retail Sales are seen at 5.4% vs. 0.8% released last April.