The price of the EUR/USD pair is showing unstable moves in the Asian session. The pair got auctioned through a narrow path between 1.0011 to 1.0041. Investors are currently waiting for the publication of the US retail sales as well as Michigan CSI.
Still Unstable Prices
The asset recovered strongly on Thursday after giving up the 1.0000 figure. The Euro and US Dollar’s parity is going to maintain bear activity.
The Dollar index is trying to recover after it fell sharply on Thursday. The index tumbled after it printed a new nineteen-year high of 109.26 as it got profit-booking. It should be noted that the index continuously refreshes its high levels.
EUR/USD price chart. Source TradingView
The continuous new highs reflect the strength of the Dollar index bulls generally. The Dollar index is expected to have its corrective period turned into a bullish momentum. It should become a wave following the violation of the 109.00 round figure.
A Percentage Rate Increase by the Fed Advised
A higher PPI and CPI were published earlier in the week. The development has encouraged the odds of a 1% Fed hike. The Federal Reserve is scheduled to have another monetary policy meeting toward the end of this month.
The regular CPI report came in at 9.1% at a higher rate than the expected 8.8%. The CPI had an initial figure of 8.6%. The PPI excluding food and oil prices also came in at 8.2% against the expected 8.1%.
The initial figure for the PPI was 8.5%. This report will exert pressure on the Euro.
Recession Fears Increase Due to Rising Interest Rates
Increasing interest rates and price pressure and increasing the possibility of a recession. The most recent inflation numbers have now increased further. A full percentage in interest rates by the Feds will drain the economy of liquidity.
Policymakers at the Federal Reserve are passing hawkish comments. The increased unemployment report and demand forecasts forced them to be hawkish. A rapid expansion of interest rates will cut down investments and affect the banking sector.
Eventually, it will increase the jobless numbers and as well as cut down the Non-farm payroll. The development will stop the Feds from an aggressive monetary policy and weaken the Dollar.
The publication of the retail sales will give further direction to investors. The first estimate for economic data for June is 0.8%. A little higher than the previous figure of -0.3%.