The EUR/USD pair fell nearly 1% to trade around 1.1740 during European hours on Monday, driven by weaker-than-expected German retail sales data for January. The Eurozone's fourth-quarter GDP growth also disappointed, adding pressure on the euro. The German economy, a key driver of the Eurozone, reported a 0.3% decline in retail sales, signaling potential challenges in domestic consumption and economic momentum. This follows a broader trend of subdued economic activity in the region, with markets now pricing in higher odds of prolonged ECB easing. The decline in EUR/USD highlights growing concerns about the Eurozone's economic resilience amid global headwinds. Traders are recalibrating positions as the ECB's dovish bias remains intact, with expectations of rate cuts in 2024. The pair's move below 1.1750 could trigger further technical selling, testing critical support levels near 1.1700. Market participants will closely monitor upcoming inflation data and ECB policy guidance for directional cues. For Gulf investors, the euro's weakness against the dollar presents both risks and opportunities. A weaker euro could benefit Middle Eastern importers but may weigh on European-focused exporters. Key watchpoints include the ECB's March policy decision, German industrial output data, and the Fed's stance on rate hikes. The EUR/USD is likely to remain volatile as macroeconomic uncertainties persist.
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