EUR/USD turns sideways around 1.0280 as US-China tensions on Taiwan escalate

• EUR/USD has turned sideways as risk sentiment is likely to sour on US-China tensions over Taiwan.
• The DXY has remained vulnerable to lower expectations for US NFP.
• A subdued Eurozone Retail Sales could weaken the shared currency bulls.

The EUR/USD pair is displaying back and forth moves in a narrow range of 1.0261-1.0283 in the early European session. The asset has faced selling pressure above 1.0280 and is likely to remain volatile as the market mood is expected to turn sour on escalating US-China tensions ahead of US House Speaker Pelosi's arrival in Taiwan.

The market sentiment is turning negative as China’s threats to Pelosi's personal safety if she visits Taiwan could escalate global tensions. Also, news wires that several Chinese warplanes fly close to the median line of the Taiwan strait on Tuesday morning, as per Reuters have bolstered the risk-on fade in the global market.

Meanwhile, the US dollar index (DXY) displayed a sideways move after a less-confident rebound. The DXY printed a fresh three-week low at 105.05 this morning on expectations of vulnerable US Nonfarm Payrolls (NFP) data. As per the market expectations, the US economy has managed 250k job additions in the labor force in July. Many big tech companies in the US have ditched the recruitment process for a while, whose multiplier effects could be witnessed in the payrolls data.

On the Eurozone front, investors await the release of the Retail Sales data. A preliminary estimate for the Eurozone Retail Sales is -1.7%, extremely lower than the prior release of 0.2%. Households in Europe are facing the headwinds of higher price pressures, which are forcing them to higher consumption expenditure despite a minor change in quantity purchased. Therefore, the Retail Sales data should be higher. And, a lower estimate for the economic demand indicates a serious fall in the retail demand.