US Dollar Gets a Shot as Euro Falters Over Weak German Retail Sales Data

The US dollar’s bull run has driven it to trade close to the highest levels seen in seven weeks in early trading on Tuesday, as the Euro suffered a sharp sell-off on the back of disappointing retail sales figures from Germany. At the time of writing, the US dollar index DXY is trading around 90.95.

The Euro fell to the lowest level in more than two weeks during the previous session after retail sales across Germany – Europe’s biggest economy, suffered a greater than expected decline for the month of December due to the latest wave of the pandemic and resulting lockdowns. Despite the holiday season, the tighter lockdowns that were enforced by the government caused consumer spending to contract by 9.6% MoM in December, worse than the 2.6% decline forecast by economists.

Even though global equity markets rallied on Monday, the US dollar continued to trade bullish, unlike in recent sessions when the improvement in risk appetite would drive investors away from its safety. Analysts expect the market sentiment to drive moves in the greenback in the near future, even though they attribute the latest wave of bullishness to the weakness in the Euro.

Despite the rally in stock markets, the mood among investors remains one of caution due to the recent frenzy among retail investors that drove up trading in GameStop and other stocks lately. Social media fueled rally in meme stocks have soured the mood in global markets even as the pandemic continues to exert pressure despite the rollout of COVID-19 vaccines across the world.