EUR/USD drops on trade tensions and weak Eurozone retail sales data

EUR/USD has declined 0.6% to 1.0435 as stalled trade negotiations and disappointing Eurozone retail sales weigh on the common currency. December retail sales contracted 0.5% month-over-month, worse than the expected 0.3% decline, marking the third consecutive monthly drop. The data reinforces concerns about weakening consumer demand across the monetary union. Trade talk delays between the EU and major partners add another layer of uncertainty, with markets pricing in potential tariff escalations. The dollar's safe-haven appeal strengthens amid risk-off sentiment, with the DXY climbing to 106.40. Technical analysis shows EUR/USD breaking below the key 1.0450 support, opening the path toward 1.0400 psychological level. The 50-day moving average at 1.0485 now acts as resistance. ECB officials remain cautious on further rate cuts given sticky services inflation, but weak growth data may force their hand. Near-term outlook remains bearish below 1.0485.