EUR/USD:Anxious Investors Await Eurozone and US Inflation Data

EUR/USD has gradually corrected towards the level of 1.0900, as investors have become anxious prior to the release of the Eurozone HICP and US PCE Price Index data. The Federal Reserve policymakers have continued to support rate hikes to counteract the persistently high US inflation. Additionally, the European Central Bank has announced plans for more rate hikes due to the expected continuation of Eurozone inflation resulting from a labor shortage.

EUR/USD has formed a Double Top pattern, although it still requires further confirmation. The currency pair failed to exceed Thursday's high around 1.0926 during the early European session, which resulted in selling pressure as investors became cautious ahead of the release of the Eurozone preliminary Harmonized Index of Consumer Prices (HICP) and United States core Personal Consumption Expenditure (PCE) Price Index data.

The US Dollar Index (DXY) has shown signs of recovery and established a cushion above 102.10. As investors anticipate a rate hike during the May monetary policy meeting by the Federal Reserve (Fed), downside bets for the USD Index have been trimmed. The approach for May policy has changed rapidly due to the decreased fears of further losses in the US banking system, allowing for a continuation of policy-tightening measures by the Federal Reserve.

Although the S&P500 futures generated gains in the Asian session, they have been halved now, as investors become increasingly anxious ahead of the release of the Federal Reserve's preferred inflation tool. However, the overall market sentiment is still bullish. The demand for US government bonds has decreased, as investors are disregarding the US banking collapse event. The 10-year US Treasury yields are unstable, hovering around 3.55%.

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