Although the retail sales data for the Euro area was revised upwards, the number itself is still noticeably worse than the forecast. The rate of decline was expected to slow from -2.8% to -2.6%, but the revised data was -2.8%. This means that instead of improving, consumer activity deteriorated, ruling out the possibility of any GDP growth. Thus, the eurozone is unlikely to avoid a recession, and the only thing that the European Central Bank can do is to soften the parameters of its monetary policy. This will make the bank the first to cut interest rates, so it is not surprising that euro is falling sharply.

Retail sales (Europe):

Pound was also losing ground, but not as much as euro. It also returned to the values at which it was before the publication of the retail sales data, indicating that the overbought condition of dollar has prompted a slight increase. Since the macroeconomic calendar is empty today, it is likely that a rebound will be seen in the market.

EUR/USD slumped by over 300 pips in just three days. Most likely, this oversold condition will prompt a technical rebound some time this week.

In GBP/USD, movement halted around 1.2000, and only the breakdown of 1.1950 will trigger a reversal.