EUR/USD faces barricades around 1.0100, focus shifts to US Inflation data

• EUR/USD is aiming to sift into the prior balanced market profile in a 1.0123-1.200 range.
• Declining gasoline prices and Fed’s soaring interest rates have trimmed consensus for the US inflation rate.
• ECB’s rate hike announcement has trimmed Fed-ECB policy divergence.

The EUR/USD pair has sensed selling interest right after opening around Friday’s high near 1.0100. The asset is expected to turn sideways as it is auctioning around a prior balanced balance profile placed in a range of 1.0123-1.200 and requires a substantial amount of strength to break the same. On a broader note, the major has shown some signs of bullish reversal and will maintain a bullish bias.

This week, the US Consumer Price Index (CPI) data will be of utmost importance. As gasoline prices have fallen dramatically in the US region and the soaring interest rates by the Federal Reserve (Fed) have squeezed liquidity, consensus for the US inflation is hinting at a decent decline ahead. The US inflation is expected to land at 8.1%, lower than the prior release of 8.5% on an annual basis. While the core CPI figure that doesn’t inculcate food and energy prices is seen higher by 10 basis points (bps) at 6%.

It seems that the prolonged energy-push inflation is losing momentum and durable goods inflation is getting more traction. Despite, a decline in US inflation consensus, the odds of a rate hike by the Fed are expected to remain stable as inflationary pressures are still widely deviated from the desired inflation rate of 2%.

Fed Governor Christopher Waller said on Friday that it was too soon to say whether inflation was moving meaningfully and persistently downward, as reported by Reuters. Fed policymaker added further that the tight labor market has faded signs of recession ahead and the extent of the rate hike will be more data-driven.

On the eurozone front, the rate hike announcement by the European Central Bank (ECB) infused fresh blood into the shared currency bulls. ECB President Christine Lagarde announced a 75 basis point (bps) rate hike to contain the inflation chaos. Also, a bumper rate hike announcement has trimmed the Fed-ECB policy divergence.