The greenback dropped dramatically following the dismal inflation numbers on Thursday. The EURUSD             , which also gained on a more “hawkish” Draghi rhetoric, jumped to two-week high of 1.17. However the pair didn’t dare to challenge the psychological level as the knee-jerk market reaction ebbed, but still looks set for another leg higher as the dollar remains on the defensive.

In his new tweet, Trump denied pressure for a trade deal with China and confirmed that his country “will soon be taking in billions in tariffs”. This statement sent the China’s yuan lower and thus has partially eased the downside pressure on the greenback. It looks like the trade conflict between the two countries is far from being resolved, which means the buck still has a bullish potential despite the recent waves of weakness.

In the short term however, the EURUSD             pair could get a chance to challenge the 1.17 barrier with the immediate target at 1.1720, should the US retail sales report disappoint. The weak CPI             figures pushed back investor expectations for further Fed rate hikes, and now some market participants are starting to doubt that the central bank will dare to hike two more times this year. This is a significant downside risk for the greenback, so retail sales data should come in better than expected to reassure the dollar bulls.