EUR/USD holds to gains near 1.0950 after US data

• The US Dollar weakens despite US Retail Sales beating expectations. 
• The EUR/USD pair holds below the 1.0950 key short-term resistance area.

The EUR/USD is rising on Tuesday, recovering modestly from monthly lows. The pair hit a fresh daily high at 1.0953 and is hovering around 1.0940 as the upside remains limited after US data.

Mixed US data

Retail sales rose in July by 0.7% in the US, surpassing the expected increase of 0.4%. Additionally, June figures were revised higher from 0.2% to 0.3%. However, a different report indicated that the NY Empire State Manufacturing Index dropped to -19, against the market consensus of -1.

Following the release of retail sales figures, the US Dollar briefly rose, causing the EUR/USD pair to fall to 1.0896. However, it quickly rebounded and reached a fresh daily high at 1.0953.

The US Dollar is currently weakening after a strong performance over the past three days. The DXY is trading below 103.00, moving away from the one-month high it reached on Monday at 103.45. 

The decline in the Greenback is happening alongside lower US yields. The 10-year Treasury yield spiked to 4.27% and as of writing, stands at 4.17%, while the 2-year yield briefly reached levels above 5.00% and is now moving toward 4.90%. Equity prices on Wall Street are falling, with the Dow Jones losing 0.85% after the first hour of trading.

Technical outlook 

The EUR/USD pair is testing the 1.0950 area, which also coincides with the 20-period Simple Moving Average (SMA) on the 4-hour chart. A consolidation above 1.0950 would strengthen the short-term outlook for the Euro, favoring a potential extension.

On the contrary, if the pair fails to regain 1.0950, it could weaken, with a break below 1.0895 exposing the weekly low at 1.0874, and further below the 1.0830 support area.

Technical levels