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EURUSD inclines towards 0.9950 as DXY turns sideways, Eurozone Retail Sales eyed

  • EURUSD is aiming to kiss the 0.9950 hurdle amid lackluster DXY.
  • Mixed responses from the risk profile have shifted investors to the sidelines.
  • For further action, Eurozone Retail Sales will be keenly watched.

The EURUSD pair is marching gradually toward the immediate hurdle of 0.9950 in the Tokyo session. The asset is mostly trading sideways amid mixed responses from the risk profile. Meanwhile, the US dollar index (DXY) is trading lackluster above 111.00. The DXY has witnessed a minor pullback to 111.10 after a nose-diving price action on Friday.

 S&P500 futures are displaying a subdued performance amid a quiet market mood while 10-year US Treasury yields are hovering around 4.16%.

Bloody Friday for the mighty DXY was led by accelerating odds for a slowdown in the pace of hiking interest rates adopted by the Federal Reserve (Fed) earlier. The US central bank has been hiking rates by 75 basis points (bps) and now critical rates are one bigger hike far from the proposed terminal rates.

Chicago Fed President Charles L. Evans cited on Friday that the time is ripe for smaller rate hikes by the Fed to avoid tightening monetary policy more than needed and slow the pace further once risks become more “two-sided”, as reported by Reuters.

Party for risk-sensitive assets could be spoiled if Thursday’s Consumer Price Index (CPI) data remained higher than projections. This may compel Fed chair Jerome Powell to ditch prior projections and come forward with newer ones as the fight with inflation will become dirty.

On the Eurozone front, investors will keep an eye on Tuesday’s Retail Sales data. The economic data may remain in a negative trajectory at -1.3% but will improve against the prior figure of -2.0%.

Apart from that, European Central Bank (ECB) policy rates are expected to accelerate further after hawkish commentary from ECB President Christine Lagarde. ECB President reiterated on Friday that the central bank will continue to raise rates to bring the inflation rate down to 2%.