EUR/USD plunges near 1.1070 on higher EU Unemployment Rate and safe-haven appeal

• EUR/USD tumbles on negative market tone as optimism on the Russia-Ukraine peace talks faded.
• Soaring inflation in Eurozone is advocating an interest rate hike by the ECB.
• EU’s Unemployment Rate is slightly higher at 6.8% than the expectation at 6.7%.

The EUR/USD pair has plunged sharply on Thursday after the risk-off impulse gained traction amid falling global equities and a higher print of the European Union (EU) Unemployment Rate. The asset eroded half of its gains made in the last three trading sessions.

The shared currency has been hit hard after the Eurostat reported Unemployment Rate at 6.8%, which remains in the mid of market consensus at 6.7% and the prior figure of 6.9%. Meanwhile, bets on an interest rate hike by the European Central Bank (ECB) are rising higher. Soaring inflation in Eurozone is compelling the ECB’s policymakers to raise the interest rate for the first time after the Covid-19 pandemic. The German annual inflation has climbed to 7.3%, the highest print in more than four decades. While the Consumer Price Index (CPI) in France has landed at 5.1% and the inflation number in Italy has reached 6.7%.

On the dollar front, the US dollar index (DXY) has reclaimed 98.00 comfortably despite a minor slippage in Core Personal Consumption Expenditure (PCE) inflation. The yearly Core PCE inflation landed at 5.4%, slightly lower than the estimate of 5.5% but higher than the prior print of 5.2%. The improvement in the safe-haven appeal after the optimism in the Russia-Ukraine peace talks faded has underpinned the greenback against the shared currency.

Going forwards, investors will focus on US Nonfarm Payrolls (NFP), which is due on Friday.