EUR/USD oscillates without a clear bias with US Retail Sales on focus

• The Euro is trapped in a tight range around 1.1550.
• Risk aversion is gripping markets ahead of the US Retail Sales release.
• EUR/USD wavers halfway through a small triangle pattern.

The EUR/USD pair is showing marginal gains but remains within the previous days' range near the 1.1550 level on Tuesday. Waning hopes of a truce in the Middle East have dampened risk appetite, yet with market volatility contained so far as investors look at the US Retail Sales release and Wednesday's Federal Reserve (Fed) monetary policy decision.

Israel and Iran have continued exchanging fire for the fifth day, and US President Donald Trump has urged citizens to evacuate Tehran, before leaving the G7 summit one day earlier to meet with the National Security Council. Concerns that the US might get involved in the conflict have boosted risk aversion.

The US central bank is widely expected to leave rates unchanged, but investors will be particularly attentive to the summary of economic projections and potential variations in the dot plot to asses the path of interest rates in the near term.

Daily digest market movers: The US Dollar recovers its safe-haven status

• Trump has dampened the market mood on Tuesday with comments playing down the possibility of a ceasefire in the Middle East, as Israel keeps pounding the Islamic Republic after threatening to kill its supreme leader, Ali Khamenei.
• Earlier today, the US president's hasty exit from the G7 summit boosted concerns that the US might get involved in the Israel-Iran conflict, triggering a risk-averse reaction that provided a moderate boost to the US Dollar.
• Israel and Iran continued exchanging missiles before that. Iran vowed to launch its largest missile attack in history at Israel. Trump's call to Tehran citizens to leave the city has fuelled concerns of a serious escalation of the conflict.
• The market reaction has been risk-averse, yet with limited volatility so far. Traders are in a wait-and-see mode, awaiting the Fed interest rate decision later in the week. The US Dollar Index (DXY), which measures the value of the USD against a basket of the most-traded currencies, is moving right above the 98.00 level, not far from last week's multi-year lows.
• The German ZEW Economic Sentiment Index has improved beyond expectations, rising to 47.5 in June from 26.2 in May, exceeding the market forecasts of a 35.0 reading. The data, however, has failed to provide any significant support to the Euro.
• The main focus today will be on the US Retail Sales data, which are expected to show a significant 0.7% contraction in May after a 0.1% growth in April, showing further evidence of the negative impact of the tariff turmoil in the US economy.
• The highlight of the week will be the Federal Reserve's monetary policy decision on Wednesday. The bank will, most probably, leave its benchmark interest rate unchanged at the current 4.25%-4.5% range, but investors will be looking for changes in the interest rate projections, which pointed to two more rate cuts this year, and the growth and inflation forecasts.
• US data released on Monday revealed a sharp deterioration of the NY Fed Manufacturing Index, which fell to a reading of -16 in June, against expectations of a moderate improvement to -5.5 from -9.2 in May.

Technical analysis: EUR/USD forming a small triangle around 1.1550

EUR/USD has been moving within an ever-tightening range since peaking above 1.1600 last week, forming a small triangle. Technical studies say that this is a continuation pattern, suggesting a bullish outcome.

The top of the triangle, now around 1.1600, is likely to hold bulls ahead of the June 12 high at 1.1630. Above here, the 1.1700 psychological level might attract sellers. The triangle pattern's measured target is at 1.1750.

On the downside, the triangle bottom is at 1.1525 ahead of the June 13 low at around 1.1490. Below here, the bullish trend would be called into question, with pressure increasing towards 1.1370 (June 6 and 10 lows).