EUR/USD marches towards 1.0540 as DXY weakens, ECB’s Lagarde eyed

• EUR/USD is holding itself above 1.0515 as risk-on impulse got underpinned.
• ECB’s Lagarde may dictate the impact of price pressures and the Ukraine crisis.
• The additions in the labor market are seen at 380k.

The EUR/USD pair is gradually advancing higher in the Asian session as the US dollar index (DXY) witnessed exhaustion at elevated levels. The DXY printed a fresh three-year high of 103.93 last week but failed to extend momentum and tumbles lower.

Considering the exhaustion in the asset ahead of the mega event of the interest rate decision by the Federal Reserve (Fed) on Wednesday, the market participants seem to follow the ‘Buy on rumor Sell on news’ trigger. It is highly expected from Fed chair Jerome Powell to sound aggressively hawkish while addressing the economy.  A jumbo rate hike to tackle the galloping impact of multi-decade high inflation, a roadmap of balance sheet reduction, and the guidance for five monetary policy meetings in the remaining year are likely to be the key events.

On the euro front, investors are focusing on the speech from European Central Bank (ECB)’s President Christine Lagarde, which is due on Tuesday. The market participants will find insights into the monetary policy action. Higher inflationary pressures from rising oil and commodity prices are demanding a rate hike to get cool down but fears of recession amid the Ukraine crisis are restricting the ECB to sound hawkish.

Although the events of the Fed rate hike and ECB’s Lagarde speech will remain major key events this week, investors will also focus on the US Nonfarm Payrolls (NFP), which are due later this week. The additions in the labor market are seen at 380k against the prior print of 431k.