EUR/USD hovering near weekly peak, eyes US Retail Sales

EUR/USD exited a two-week-long bearish channel on Wednesday and is now trading just a few pips short of the weekly tops near 1.1160.

Dollar offered as T-yields dropped

The single currency traded on a positive note on Wednesday, helping EUR/USD exit a falling channel despite below-forecast Industrial Production and softer Eurozone trade surplus.

Markets offered US dollars as treasury yields slipped amid the rally in the US stocks, triggered by the optimism of the US-China phase-one trade deal.  

Notably, the US 10-year yield fell by nearly three basis points to 1.78% on Wednesday, having declined by five basis points on a preceding day.

If the softer tone in the treasury yields persists, EUR/USD could continue to gain altitude. The bid tone, however, would weaken if the German inflation data, due at 07:00, prints below initial estimates.

Later in the day, all the attention will be on the US Retail Sales, which are forecasted to have risen by 0.3% month-on-month in December, following November's 0.2% rise.

Technical levels

The bearish channel breakout seen in the daily chart indicates the pullback from recent highs near 1.1240 has ended and the spot could rise back above 1.12. The bullish move, however, will likely remain elusive if the US Retail Sales beat estimates by a big margin, reinforcing expectations for a stronger economic performance in 2020. On the downside, key supports are located at 1.1085 (Jan. 10 low), 1.1066 (Dec. 20 low).