U.S. Dollar Rebounds After Strong Retail Sales Data

The U.S. dollar erased its early losses against its major counterparts in the European session on Tuesday, as the nation's retail sales increased in April, in a sign that the economy is gaining traction.

Data from the Commerce Department showed that retail sales rose by 0.4 percent in April after falling by a revised 0.7 percent in March.

Economists had expected retail sales to climb by 0.7 percent compared to the 1.0 percent slump originally reported for the previous month.

Excluding an increase in sales by motor vehicle and parts dealers, retail sales still rose by 0.4 percent in April after sliding by 0.5 percent in March. The rebound in ex-auto sales matched economist estimates.

The greenback rebounded to 1.2495 against the pound and 0.8956 against the franc, reversing from its early 5-day low of 1.2546 and a 4-day low of 0.8919, respectively. The greenback is likely to find resistance around 1.21 against the pound and 0.92 against the franc.

The greenback recovered to 136.23 against the yen and 1.0868 against the euro, from an early low of 135.65 and a 4-day low of 1.0904, respectively. Next near term resistance for the greenback is likely seen around 139.00 against the yen and 1.05 against the euro.

The greenback rose back to 0.6665 against the aussie and 0.6232 against the kiwi, up from its early 5-day low of 0.6709 and a 4-day low of 0.6259, respectively. The greenback may find resistance around 0.64 against the aussie and 0.61 against the kiwi.

In contrast, the greenback weakened against the loonie, touching a 5-day low of 1.3406. The greenback is seen finding support around the 1.32 level.