EUR/USD surrenders gains but keeps eyes on 1.1000 as rate hike from ECB looks confirm

• EUR/USD has surrendered the majority of its intraday gains as the USD Index has found intermediate support.
• The USD Index was heavily battered on Wednesday after dovish commentaries from Fed policymakers.
• Price pressures in Eurozone have decelerated heavily but are still thrice the required rate of 2%.

The EUR/USD pair has surrendered the majority of intraday gains added in the Asian session. The major currency pair has faced some selling pressure while attempting to recapture the psychological resistance of 1.1000. Late Wednesday, the shared currency pair reported a perpendicular rally, which was supported by a sell-off in the US Dollar Index (DXY).

S&P500 futures have generated some losses in Asia, carry-forwarded negative cues observed on Wednesday. On Wednesday, US equities faced immense pressure as Federal Reserve (Fed) chair Jerome Powell’s hawkish testimony weighed heavily on tech-savvy stocks.

The USD Index is looking for support after diving to near its crucial support of 102.00. The appeal for the USD index faded sharply as Fed Powell’s testimony provided clarity to investors about further policy action. Jerome Powell stated that the majority of policymakers are in favor of more interest rates this year. The focus of the central bank is to bring down inflation to 2% but it has a long way to go.

The major catalyst that has weighed pressure on the USD Index is the dovish commentary from Fed policymakers. Atlanta Fed President Raphael Bostic cited that the central bank should not raise interest rates further or it would risk "needlessly" sapping the strength of the economy. While Chicago Fed Bank President Austan Goolsbee favored allowing current interest rates required time to show their impact on the economy.

On the Eurozone front, the context of more interest rate hikes from the European Central Bank (ECB) is well supported as inflation has been confirmed above 6%. No doubt, price pressures have decelerated heavily but are still thrice the required rate of 2%. ECB President Christine Lagarde has already confirmed a rate hike in the July meeting.