EUR/USD surrenders crucial 1.0580 support as Fed’s rate hike fears mount

• EUR/USD has confidently slipped below 1.0580 as more rates by the Fed are in pipeline.
• S&P500 failed to hold gains added on Monday as higher rates by the Fed will push the US economy into a recession.
• German preliminary annualized HICP is expected to decline to 9.0% from the prior release of 9.2%.

The EUR/USD pair has slipped below the critical support of 1.0580 in the early Asian session as fears of more rates announcement by the Federal Reserve (Fed) are mounting among the market participants. The major currency pair is expected to re-test a seven-week low around 1.0530 as skyrocketing hawkish Fed bets have forced investors to hide behind the US Dollar to dodge volatility.

S&P500 failed to hold gains added on Monday as the street expects that higher rates by the Fed will push the United States economy into a recession. No doubt, the strong labor market is propelling consumer spending at the current juncture. However, a continuation of policy tightening will break optimism among firms, and demand for labor will be trimmed significantly.

The recovery move in the US Dollar Index (DXY) has pushed it above 104.60 and is expected to fuel it further to recapture a seven-week high around 105.00. Meanwhile, the return on 10-year US Treasury bonds is still inside the woods around 3.93%.

For further guidance, the US ISM Manufacturing PMI data will remain in limelight. As per the projections, the economic data is seen at 48.0 from the former release of 47.4. Apart from that, the New Orders Index that conveys forward demand is expected to rebound to 43.7 from the prior figure of 42.5.

On the Eurozone front, investors are keeping an eye on preliminary German Harmonized Index of Consumer Prices (HICP) (Feb) data. The annualized data is expected to decline to 9.0% from the prior release of 9.2%. It seems that rising interest rates by the European Central Bank (ECB) are doing the job effectively. However, ECB President Christine Lagarde has confirmed the continuation of the 50 basis points (bps) rate hike culture for the March monetary policy as the current monetary policy is not restrictive enough to squeeze inflationary pressures as expected.