The euro makes a dramatic comeback as the ceasefire fuels the market, but why can weak data hardly stop the bulls?

(1) During the European session on Thursday, the euro climbed strongly against other major currencies. Despite weak eurozone retail sales data, market sentiment improved significantly due to the Lebanon ceasefire agreement. Israel and Lebanon agreed to implement a ceasefire, coupled with easing concerns surrounding Trump’s tariff comments and falling oil prices, which together boosted risk appetite. (2) However, the euro's gains in the region were still constrained by multiple factors, including a new wave of tension in the private credit markets, continued worries from Trump’s tariff statements, and uncertainty regarding inflation and interest rate prospects. Data showed that eurozone retail sales in April declined by 0.4% month-on-month, worse than the expected drop of 0.3%, and in sharp contrast to March's growth of 0.8%. The year-on-year increase also slowed from 2.1% in March to 1.0%, mainly dragged down by falling sales of non-food items and automotive fuels. (3) In terms of market conditions, the euro rose against the pound to a four-day high of 0.8656; against the US dollar, Swiss franc, and yen, it climbed to 1.1631, 0.9191, and 185.96, respectively. Versus the Australian dollar, New Zealand dollar, and Canadian dollar, it reached 1.6302, 1.9803, and 1.6167, all recent highs. The market is watching for the release of the US weekly initial jobless claims data during Thursday's New York session to determine whether the euro can further test resistance levels.