EUR/USD Holds Losses Near 1.1750 As German Retail Sales Fall In January

• EUR/USD weakened as Germany’s Retail Sales dropped 0.9% MoM, missing expectations for a 0.2% decline.

• US Dollar strengthens as risk aversion rises following coordinated US-Israel strikes on Iran.

• The Greenback gains support as strong inflation signals tariff pass-through, dimming prospects for Fed rate cuts.

EUR/USD declines nearly 1%, trading around 1.1740 during the European hours on Monday. The pair struggles as the Euro (EUR) remains under pressure after Germany’s Retail Sales fell 0.9% month-over-month (MoM) in January, undershooting expectations for a 0.2% decline and reversing an upwardly revised 1.2% increase in the previous month. On an annual basis, retail sales rose 1.2%, slowing from December’s upwardly revised 2.5% gain, which had been the strongest pace in five months. Retail sales increased 2.7% in 2025 overall.

Moreover, the HCOB Germany Manufacturing Purchasing Managers’ Index (PMI) rose to 50.9 in February from 49.1 in January. The HCOB Eurozone Manufacturing PMI was confirmed at 50.8, up from 49.5. Both readings marked the strongest levels in 44 months.

The risk-sensitive EUR/USD pair plunged as the US Dollar (USD) gained ground amid increased risk aversion following the United States (US) and Israel's coordinated attack on Iran over the weekend. The joint US-Israeli operation reportedly killed Supreme Leader Ayatollah Ali Khamenei, marking a pivotal moment for Iran. US President Donald Trump said US military operations in Iran are “ahead of schedule,” according to CNBC.

On the United States (US) side, traders await the ISM Manufacturing Purchasing Managers’ Index (PMI) due later in the day, which is expected to inch lower to 52.3 in February, from the previous 52.6 reading. ISM Manufacturing Employment Index data will also be eyed.

The US Dollar also receives support as stronger-than-expected US inflation data suggested firms are passing tariff costs on to consumers, further clouding the outlook for Federal Reserve rate cuts. However, Fed Governor Stephen Miran called for significant interest rate cuts as soon as possible, arguing that underlying price pressures remain subdued and that persistently high rates reflect distortions in inflation measurement.