I'm hoping one of the actual devs will jump in on this one. I've seen some things posted by non official sources regarding retreat that I can't figure how they got that interpretation.

Here is the situation. Player A (Zerg) is invading player B's (terran) area. There are 3 spaces. 2 zerg owned, and the one terran space. When th retreat is played, all of the zerg forces were mobilized from one of their areas into the terran. When the battle is canceled does that cancel the movement? Do they return to their starting places? I assumed the results should be treated exactly as if the defenders had all successfully used cloaking, except have to retreat to an empty space on the active planet as per the card text instead of being able to fall back to an adjacent planet. If they exceed the unit limit of the space they retreat to, the excess die. Attacker continues like any other successful attack, and send any overflow to any acceptable spot.

I think that the attacker can't retreat.

The card states that the battle is canceled - the retreat step is a part of resolving battle, so that you should resolve only instructions on the Event card. There's no word about retreating attacking units - only the sentence "units in excess of unit limit are destroyed". Their movement is ofc not canceled - they have to stay in the contested area.

BTW: If all defenders used successfully Cloaking they could withdraw, not retreat. It's not the same - withdraws are resolved during skirmishes only and units can go to multiple empty/friendly areas of the same planet. So that this card is rather like retreat step of the battle, limited to the same planet - but you still have to choose a single (friendly/empty) area.

If you need official confirmation, send the question to game designers here: www.fantasyflightgames.com/edge_faq.asp

The one reason I would question that interpretation is that by the point the card is talking about "All units in excess" they are talking about the movement of the defender's pieces to another place on the planet. If they meant it applied to attackers as well, I assume the devs would have indicated it,