EUR/USD spikes above 0.9730 as DXY skids, ECB Lagarde’s speech/Fed minutes in focus

• EUR/USD has refreshed its day’s high at 0.9734 amid an intraday knee-jerk reaction in the DXY.
• US President Joe Biden sees only a slight recession situation ahead.
• Risk sentiment is shifting towards a positive trajectory as yields drop to near 3.9%.

The EUR/USD pair has climbed above the immediate hurdle of 0.9700 sharply and has refreshed its day’s high at 0.9734 in the Tokyo session. The risk profile is still averse as S&P500 futures are still consolidating. Meanwhile, the US dollar index (DXY) has witnessed a deep cut after failing to sustain fresh weekly highs around 113.60 and has slipped to near 113.00.

For an improvement in overall risk appetite, more filters are required to confirm fading of negative market sentiment. Also, the 10-year US Treasury yields have dropped to near 3.91% after failing to overstep the critical hurdle of 4%.

On Wednesday, the release of the Federal Reserve (Fed) minutes will be in focus. The Fed minutes will provide an elaborative explanation behind announcing the third 75 basis points (bps) interest rate hike.  The minutes will also provide viewpoints of all Fed policymakers toward interest rate targets for bringing price stability. Apart from that, the current situation of economic prospects will be of utmost importance.

After commentary from chairman and CEO of JPMorgan Chase, Jamie Dimon, in which he warned that the US economy could slip into recession in the coming six to nine months. Comments from US President Joe Biden that ''If recession will be there, it’ll be a very slight has provided a sigh of relief.

On the Eurozone front, investors are awaiting the speech from European Central Bank (ECB) President Christine Lagarde. The speech will provide clues about the likely monetary policy action by the ECB. Apart from that, some light on the status of the Russia-Ukraine war will be the cherry on the cake.