EUR/USD aims to recapture 1.0760, investors await Fed Powell’s speech for fresh cues

• EUR/USD is looking to recapture 1.0760 as the overall risk profile is still positive.
• Only the stronger-than-projected US CPI report could avoid certain fresh lows for USD Index.
• The speech from Fed Powell will provide cues about the likely monetary policy action for the February meeting.

The EUR/USD pair has displayed a corrective move after failing to extend the upside range above the crucial resistance of 1.0760. The major currency pair has not shown any meaningful sign of bearish reversal, therefore, it would not be ideal to place bearish bids on EUR/USD for now. Investors are required to keep caution in the overall bullish environment as risk-sensitive assets have already displayed a strong run-up, which could force investors to ease their longs ahead.

S&P500 ended on a marginal weak note as Goldman Sachs announced the biggest lay-offs since the subprime crisis as Wall Street banks have suffered a major slowdown in corporate deal-making activity as a result of volatile global financial markets, as reported by Bloomberg. Meanwhile, a decline in 10-year US Treasury yields to 3.53% also weighed pressure on the US Dollar Index (DXY) pushing it to near 102.20, a fresh seven-month low figure.

The US Dollar Index (DXY) is subjected to continue making fresh lows as a meaningful drop in economic activities in the United States economy and a one-time significant drop in wage inflation has accelerated expectations of a deceleration in the pace of interest rate hike by the Federal Reserve (Fed). According to the economists at MUFG Bank, only a stronger-than-expected US Consumer Price Index (CPI) on Thursday would avoid a slide to fresh lows for the USD Index.

But before the release of the US CPI report, the speech from Fed chair Jerome Powell will provide more clarity on monetary policy action for the December meeting.

On the Eurozone front, Economic Bulletin published by the European Central Bank (ECB) clears that wage growth is going to be extremely solid ahead led by robust labor markets that so far have not been substantially affected by the economic slowdown, increases in national minimum wages and some catch-up between wages and high rates of inflation.