European session review: EUR weakens after Eurozone's February inflation data, Germany's January retail sales statistics

EUR fell against most of its major counterparts in the European session on Tuesday, as investors digested the flash estimate of Eurozone's CPI for February and Germany's retail sales for January, while the overall market sentiment remained dented by the comments from China’s top banking regulator, which expressed concern about bubbles in global financial markets.

The flash figures from Eurostat revealed that Eurozone's consumer price inflation was steady at 0.9 percent y-o-y in February, unchanged from the previous month's 11-month high. This was in line with economists' forecast as well. Meanwhile, core inflation, which excludes prices of energy, food, alcohol & tobacco, decelerated to 1.1 percent y-o-y from 1.4 percent y-o-y in January. This also matched economists' estimates.

Destatis reported that Germany's retail sales decreased 4.5 percent m-o-m in January, following a downwardly revised 9.1 percent m-o-m plunge in December. Economists had expected only a 0.3 percent m-o-m decline.  In y-o-y terms, retail sales fell 8.7 percent after an upwardly revised 2.8 percent climb in the previous month.  This was the first annual drop since April 2020 and much worse than economists' forecasts of a 1.3 percent raise. According to Destatis, the poor January readings can be explained by the second coronavirus lockdown, which led to a partial retail closure starting on December 16, 2020. Germany's lockdown will reportedly be extended until March 28.