EUR/USD aims to recapture 1.0750 ahead of ECB and US Inflation

• EUR/USD is advancing towards 1.0750 as investors await interest rate decisions from the ECB.
• The shared currency bulls are strengthened by the upbeat GDP data.
• Investors will remain busy as the ECB’s policy will be followed by the US Inflation event.

The EUR/USD pair has bounced back sharply after ranging around 1.0710 in the Asian session. A minor rebound in the risk appetite has brought some bids for the shared currency bulls. More or less, the asset is going to react to the interest rate decision by the European Central Bank (ECB).

Despite, mounting inflationary pressures in the eurozone, the ECB is expected to stick to its neutral policy and won’t hike the interest rates. Russia’s invasion of Ukraine and eventually rising fossil fuels and commodity prices have pushed the inflation rate above 8% in the eurozone. Still, the ECB is expected to continue its accommodative policy.

Also, the shared currency bulls are performing well on upbeat Gross Domestic Product (GDP) data. Eurostat reported the quarterly GDP at 0.6% higher than the forecasts of 0.3% while the annual figure at 5.4%, outperformed the expectation of 5.1%.

Meanwhile, the US dollar index (DXY) is focusing on the release of the US Consumer Price Index (CPI), which is due on Friday.  A preliminary estimate for the annual CPI figure is 8.3%, similar to the former figure. However, the core CPI may tumble to 5.9% from the prior print of 6.2%, thanks to the quantitative tightening approach adopted by the Federal Reserve (Fed).

The Fed has already elevated its interest rates by 25 basis points (bps) and 50 bps in March and May’s monetary policies respectively. A consecutive 50 bps rate hike is expected from the central bank next week.