EUR/USD advances towards 1.0000 amid hawkish ECB bets, US GDP eyed

• EUR/USD is marching towards parity as the odds of a bigger rate hike by the ECB have strengthened.
• Mixed responses from the risk profile have put the DXY on the sidelines.
• The US GDP data is seen higher at 2.4% vs. a decline of 0.6%.

The EUR/USD pair is juggling in a 0.9943-0.9969 range in the Tokyo session amid a quiet market mood. The asset has turned sideways after a perpendicular upside move and is looking to kiss the parity ahead as bets have soared for a bigger rate hike by the European Central Bank (ECB). Market sentiment has been hit amid a decent drop in S&P500 futures after Microsoft (MSFT) announces a cut in sales growth projections. However, the overall market spirit is upbeat.

The US dollar index (DXY) is continuously performing lackluster in Tokyo after a sheer drop from 112.00 in the late New York session. The mighty DXY is playing around 111.00. Also, the 10-year US Treasury yields have felt the heat of sheer demand for US government bonds and have dropped to 4.10%.

This week, the release of the US Gross Domestic Product (GDP) data will be a major trigger. As per the projections, the US economy has grown at a 2.4% rate vs. a decline of 0.6% reported earlier in the third quarter of CY2022. It would be worth watching the placement of the GDP figures in comparison with the projections as Monday’s PMI numbers reported by S&P were lower than expectations.

On the Eurozone front, the odds of a gas price mechanism announcement are gaining more attention. Talking on the European energy crisis, Germany’s Economy Minister Robert Habeck said on Tuesday that they “expect the gas price mechanism decision at the next EU Council.” He further added that “Joint EU purchases are the best way to keep the gas price low,”

Going forward, ECB President Christine Lagarde is set to announce a second consecutive 75 basis point (bps) rate hike, as per analysts at Rabobank. Projections of 75 bps rate hike have also been approved by Economists at ING. In addition to that, they believe that the hike should fail to offer substantial and long-lasting support to the euro.