EUR/USD oscillates at a make or a break above 1.0730, focus shifts to US Inflation

• EUR/USD is juggling above 1.0730, likely to remain volatile ahead of US Indflation.
• Fed Barkin argued that majority of inflation slowdown is backed by a few goods.
• A decline in the German inflation might not trim the hawkish ECB bets.

The EUR/USD pair is displaying back and forth moves marginally above 1.0730 in the early Asian session. The major currency pair is oscillating at a make or a break level as solid upside action by the Euro on Thursday met with significant offers and dropped with similar pace in the New York session. A further decline in EUR/USD will drag the asset vigorously.

The sell-off move in the shared currency pair triggered as investors shifted their focus towards the release of the United States Consumer Price Index (CPI), which is scheduled for Tuesday. The US Dollar Index (DXY) recovered firmly after dropping to near 102.28. The USD Index is still below 103.00, however, the risk-aversion market theme could result in more gains for the safe-haven assets.

Meanwhile, S&P500 ended Thursday on a weaker note. Opening gains faded and a bearish drive settled Thursday’s session on a negative note as Federal Reserve (Fed)’s higher rate concerns refreshed after commentary from Richmond Fed President Thomas Barkin. The return generated by 10-year US Treasury bonds recovered sharply and scaled above 3.66%.

Fed Barkin argued that it would make sense for the Fed to steer "more deliberately" from here due to lagged effects of policy, as reported by Reuters. He further added that "While average inflation has peaked, the decline has been distorted by a few goods, median has stayed high."

On the Eurozone front, German Harmonized Index of Consumer Prices (HICP) dropped to 9.2% vs. the consensus of 10.0% and the former release of 9.6%. The inflationary pressures have surprisingly slowed, however, the odds of a continuation of bumper interest rate hikes by the European Central Bank (ECB) are still solid. The inflation rate is still hovering at extremely elevated levels, which needs a monetary policy sufficient restrictive to tame inflation.