EUR/USD initially rose on broader dollar slippage on Tuesday, though U.S. CPI was hot enough nL1N34U1JY to keep this week's recovery subdued ahead of retail sales on Wednesday.

Prices are well off of the knee-jerk post-CPI peak at 1.0805 on EBS that ran into resistance from the 38.2% Fibo of February's 1.1034-0656 drop at 1.0804, well ahead of the 50% Fibo, tenkan and kijun at 1.0845.

Two-year bund-Treasury yield spreads were 5bp lower on higher Fed rate hike pricing following faster monthly rises in U.S. all-items and core CPI, as well as services ex-shelter, Fed Chair Jerome Powell's recent inflation touchstone, up a chunky 0.6%.

If Wednesday's U.S. retail sales rebound at least the forecast 1.8% after December's 1.1% slide, EUR/USD could again trade below the 23.6% Fibo of the September-February rally at 1.0678 and its 55-DMA at 1.0696, opening a door to 2023's 1.0482 low by the 38.2% Fibo at 1.0459.

Treasury yields may get support from news Vice Chair Lael Brainard, seen as one of the least hawkish Fed members, is leaving nL1N34U0ZC.

A bigger issue is whether deeply negative real ECB rates versus about-to-be-positive real Fed rates reveals the euro zone's historical relative weakness.

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