EUR/USD skids to near 1.0520 ahead of Eurozone inflation and Fed Powell

• EUR/USD has corrected to near 1.0520 amid a rebound in the risk-off impulse.
• Investors are awaiting the release of the eurozone HICP and Fed Powell’s speech for further guidance.
• A preliminary estimate for the eurozone HICP is a stabilization of the prior print.

The EUR/USD pair is witnessing a corrective move after a vertical rally to a high of 1.0600 on Thursday. The pair displayed a juggernaut upside move on puzzled market sentiment in which risk-sensitive currencies and gold prices are scaling higher while the global equities and the US dollar index (DXY) are facing the headwinds of dumping.

The eurozone bulls have shifted their focus to the Harmonized Index of Consumer Prices (HICP) to be released by Eurostat on Friday.  A preliminary estimate shows that the annual HICP figure is expected to remain unchanged at 8.1%. Also, the core HICP that doesn’t include food, energy, alcohol, and tobacco is seen unchanged at 3.8%.

Investors are likely to find the stable inflation rate quite cheerful as various economies are reporting their price pressures report beyond their prior prints. But still, this will compel the European Central Bank (ECB) to sound extremely hawkish in its monetary policy dictation in July.

On the dollar front, the US dollar index (DXY) has rebounded sharply and is aiming to stabilize above 104.00 on a rebound in the negative market sentiment. The DXY is attempting to regain its mojo ahead of the speech from Fed chair Jerome Powell. Fed Powell is expected to dictate the ideology behind announcing a 75 basis point (bps) rate hike. Also, the dictation of the roadmap for containing the price pressures will be keenly watched.