EUR/USD corrects below 1.0300 as DXY strengthens ahead of US Michigan CSI

• EUR/USD has tumbled to near 1.2850 amid a significant recovery in the DXY.
• A lower US CPI print has trimmed the odds of hawkish guidance while rate hike odds are solid.
• This week, the US Michigan CSI data will be of utmost importance.

The EUR/USD pair has declined gradually to near 1.2850 after surrendering the round-level support of 1.0300 in the Asian session. Earlier, the asset printed a fresh monthly high of 1.0369 after the US dollar index nosedived on the lower print of the US Consumer Price Index (CPI).

The plain-vanilla US CPI released lower at 8.5% than the estimates of 8.7% and the prior release of 9.1%. No doubt, a lower release of US inflation has cooled off volatility in the global market and has trimmed the odds of extremely hawkish guidance by the Federal Reserve (Fed). However, the odds of a rate hike are still intact as the road to reaching 2% inflation rate is far from over. Therefore, the US dollar index (DXY) has extended its recovery in the Asian session after a pullback move from a six-week low of 104.64.

Going forward, investors will keep an eye on the US Michigan Consumer Sentiment Index (CSI) data, which is due on Friday. As per the market consensus, the sentiment data is seen higher at 52.2 from its prior release of 51.5. A consecutive improvement is expected in the confidence of consumers after the data slipped to 50 for the first time in the past 20 years.

On the Eurozone front, an unchanged German inflation data at 8.5% despite a meaningful plunge in the oil prices have created havoc for the European Central Bank (ECB). A road to bring inflation down is getting trickier for the ECB as hiking interest rates is not easy due to debt-burden countries in the Eurozone.