Euro holds gains, as lower Oil prices offset weak German Retail Sales figures

• EUR/USD approaches the 1.1200 area but remains trading within Friday's range.
• The lower Oil prices are offsetting investors' frustration about the unexpected decline in German Retail Sales.
• The US Dollar is showing a moderately softer tone ahead of the US midterm elections.

The Euro (EUR) appreciates 0.2% against the US Dollar (USD) on Monday as a moderate risk appetite, with Oil prices pulling down from highs, has offset investors' disappointment about the weak German consumption figures. The EUR/USD pair is trading at 1.1185 at the European session opening, up from last week’s highs near 1.1100 but still within Friday’s trading range.

German data released on Monday revealed that Retail Sales fell 2% in September, following a 1.2% growth in August, against market expectations of a 0.4% gain. Year-on-year, sales dropped 2.3% after a 0.3% decline in the previous month.

The impact of these figures, however, has been cushioned by the decline in Oil prices, which gives some respite to the Eurozone’s Oil-importing economies. Brent Oil drops more than 2% on Monday, reaching prices below $110.00 as Qatari mediators keep working with Tehran to resume the US-Iran peace negotiations.

US Dollar suffers with US elections in focus

The US Dollar, on the other hand, has opened the week in a softer tone, as markets turn their focus to the US Midterm elections, which will take place on Tuesday. Recent polls point to a Democrat victory in Congress, with voters frustrated by the higher cost of living, amid escalating energy prices, while the Senate is expected to be a close call.

A clear Democrat victory is expected to hamper plans for data centres and AI infrastructure, which are facing increasing opposition across the country, although the main issue is likely to be the increase of the debt ceiling, which will be reached in 2027 and might lead to a serious standoff.

Beyond that, the week will be packed with data. On Monday, the US ISM Manufacturing Purchasing Managers Index (PMI) will gather some attention, ISM Services PMI data will be out on Wednesday, and the all-important Nonfarm Payrolls review, due on Friday, will complete the US calendar.

In the Eurozone, the HCOB Manufacturing PMI will be released later in the day. On Tuesday, the focus will be on unemployment data; Services PMI  and consumer inflation data will be out on Wednesday, ECB’s Lagarde speaks on Thursday, and on Friday, September’s Retail Sales data will close the week.