EUR/USD skids to near 1.0550 as risk-on impulse fades, Eurozone Consumer Confidence eyed

• A failed attempt to sustain above the round-level resistance of 1.0600 has weakened the euro bulls.
• The sustainability of the Eurozone inflation of around 7.5% has bolstered the hopes of a rate hike.
• Investors are focusing on Eurozone Consumer Confidence, which can marginally improve to -21.5.

The EUR/USD pair has witnessed a minor fall after breaching the early Asian session’s consolidation formed in a narrow range of 1.0579-1.0588 as the risk-off impulse rebounded. The asset has slipped to near 1.0550 and is expected to remain uncertain as the market participants are awaiting the release of the Eurozone Consumer Confidence on Friday.

A preliminary estimate at -21.5 is indicating a negligible improvement in the Consumer Confidence from the prior print of -22.

On a broader note, the shared currency bulls are performing stronger this week as the US dollar index (DXY) surrendered more than 2% of its gains from its 19-year high of 105.00 printed last week. Fed policymakers have started considering two more 50 basis points (bps) interest rate decision announcements this year. Mounting price pressures are hurting the paychecks of the households in the US and to fix the same the Fed needs to paddle up interest rates more.

Also, the sustainability of the inflationary pressures in the eurozone has kept the euro bulls firmer. The Eurostat reported the annual Harmonized Index of Consumer Prices (HICP) at 7.4%, a tad lower than the estimates and the prior print of 7.5%. This has raised the odds of the announcement of a rate hike cycle by the European Central Bank (ECB). It is worth noting that the ECB has not elevated its policy rates, just like the other Western leaders, since the Covid-19 pandemic.