Euro Struggles Under Weight of Weak Euro-zone Retail Sales - Chance for Recovery Tomorrow

Likewise, Euro-zone services PMI was confirmed at a reading of 48.3 in July, down from 49.1, which marks not only the second straight month of contraction but also a five year low. While ECB President Jean-Claude Trichet was fairly clear in stating that there were significant downside risks to growth during his monthly press conference in July, when the central bank hiked rates to 4.25 percent, he maintained that growth was “moderate” and “ongoing.” However, given these broad indications of slowing expansion, Mr. Trichet may be more inclined to admit the deterioration in the economy during his 8:30 EDT press conference on Thursday. Looking ahead to Wednesday, German factory orders are expected to rise slightly during the month of June, but the annual rate is anticipated to drop to -4.7 percent. While the PMI Manufacturing reports for Germany during that period did reflect growth during that month, the index has steadily fallen throughout the year, creating some downside risks for this release. However, the currency is more likely to continue trading as an anti-dollar vehicle throughout the day, and as a result, lingering sentiment from the FOMC’s policy statement may have a greater impact. My fundamental bias for the euro on Wednesday: bullish. Check out our Chief Strategist’s forecast for EUR/USD.