• EUR/USD moves higher above 1.0900 as investors see a Fed rate cut in September as a done deal.
• Better-than-expected US Retail Sales report fails to diminish Fed rate-cut prospects.
• The ECB is expected to leave interest rates unchanged on Thursday.

EUR/USD jumps above 1.0900 and reaches a new four-month high in Wednesday’s European session. The major currency pair extends gains after recovering its losses on Tuesday, driven by the better-than-expected United States (US) Retail Sales report for June. 

Data showed on Tuesday that monthly Retail Sales remained unchanged, as expected, as lower receipts at auto showrooms were offset by robust demand for core goods. The Retail Sales Control Group, a key measure of consumer spending component of Gross Domestic Product (GDP) that excludes receipts from auto dealers, building-materials retailers, gas stations, office supply stores, mobile home dealers, and tobacco stores, rose at a stronger pace of 0.9% than the former release of 0.4%.

The US Census Bureau also revised May’s Retail Sales reading to 0.3% from 0.1%, adding to economic strength. Though the Retail Sales report has emerged better than estimates, it is unable to weaken firm speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.