The EUR/USD pair is attempting to find a cushion around 1.0460 after a sheer downside move from 1.0564 recorded on Wednesday. A thunderous FX arena on a soaring risk-aversion theme brought a swift sell-off in the risk-sensitive currencies. The asset sees more weakness as negative market sentiment is still dominating the global markets.
The shared currency bulls found barricades near their crucial resistance at 1.0550 after the Eurostat reported the Harmonized Index of Consumer Prices (HICP) on Wednesday. The annualized Eurozone HICP landed at 7.4%, a little lower than the estimates and prior figure of 7.5%. The euro bulls are facing tremendous pressure despite a minor fall in the HICP numbers as investors have started believing that the inflationary pressures will persist longer due to supply chain issues and the Eastern European crisis. To contain the ramping up inflation, European Central Bank (ECB) policymakers advocate a rate hike cycle to start with a quarter-to-a-percent rate hike in July.
On the dollar front, the US dollar index (DXY) has rebounded sharply amid an improved safe-haven appeal. The DXY is oscillating marginally below 104.00 and is expected to overstep the round-level resistance as market sentiment may remain negative for a little longer. Also, Philadelphia Federal Reserve (Fed) Bank President Patrick Harker has favored two 50 basis points (bps) rate hikes in June and July.
This week, the Eurozone Consumer Confidence will remain in focus. The confidence of the European consumers is expected to improve to -21.5 against the prior print of -22.