Dollar Retreats as Retail Sales Miss Estimates, EUR/USD Tests New Highs

The U.S. dollar pulled back as retail sales dropped, causing the EUR/USD to move higher and testing new highs.

The disappointing Retail Sales report showed a decrease of -0.6% month-over-month in July, compared to analyst forecast of +0.1%, while the Michigan Consumer Sentiment report declined from 55.2 in July to 51.0 in August, missing consensus estimates of 54.5.

As traders focused on the weak economic data, they shifted their attention towards other markets, causing the USD/CAD to test new lows and the GBP/USD to climb higher as it tries to settle above the resistance level at 1.3550-1.3565.

The USD/JPY rebounded from session lows and moved back towards the key 159.50 level, receiving support from rising Treasury yields despite weak Retail Sales data.