EUR/USD corrects to near 1.0900 as focus shifts to FOMC minutes and Eurozone Retail Sales

• EUR/USD has dropped to near 1.0900 amid a cautious market mood.
• S&P earnings could be full of surprises as overall demand is strong in conjunction with higher interest rates by the Fed.
• US Manufacturing PMI has contracted straight for eight months.

The EUR/USD pair has corrected to near the round-level cushion of 1.0900 in the late Asian session. The major currency pair has faced some pressure as the market mood has turned cautious amid the holiday in the United States due to Independence Day.

S&P500 futures are showing choppy moves in late Tokyo as investors have sidelined ahead of the quarterly result season. Earnings could be full of surprises as overall demand is strong in conjunction with higher interest rates by the Federal Reserve (Fed).

The US Dollar Index (DXY) has climbed to near 103.00 as investors have started ignoring weak US Manufacturing PMI and are focusing on the release of the Federal Open Market Committee (FOMC) minutes. On Monday, the US ISM reported that Manufacturing PMI was contracted straight for eight months as a figure below 50.0 is considered a general contraction. The economic data landed at 46.0, significantly lower than the expectations of 47.2 and the former release of 46.9.

Contrary to the US PMI data, New Orders Index jumped to 45.6, higher than the consensus of 44.0 and the prior release of 42.6.

Meanwhile, the Euro bulls are facing some challenges as the preliminary headline Harmonized Index of Consumer Prices (HICP) for June has softened to 5.5% in June vs. the prior release of 6.1%. This is the seventh decline in price pressures in the past eight months. However, core inflation that excludes volatile oil and food prices decelerated marginally to 6.8% vs. 6.9% released earlier.

European Central Bank (ECB) President Christine Lagarde has already conveyed that the interest rate policy is not sufficiently restrictive to bring inflation to 2%.

Going forward, investors will keep focusing on the Eurozone Retail Sales data, which will release on Thursday. Monthly Retail Sales data is seen at 0.2% vs. a stagnant figure.