EUR/USD Price Analysis: Eyes 1.1100 as US Inflation softens and hawkish ECB bets soar

• EUR/USD has resumed its upside journey after building a base below 1.1050 amid a risk-on mood.
• ECB Vasle has kept doors open for a 25 bps or 50 bps rate hike for May’s policy meeting.
• The US Dollar is facing immense pressure amid expectations that the Fed will arrest stubborn inflation sooner than expected.

The EUR/USD pair has resumed its upside journey after building a base below 1.1050 in the Asian session. The major currency pair is gaining strength through support from both currencies. The US Dollar is facing immense pressure as the street is expecting that the Federal Reserve (Fed) will arrest the United States stubborn inflation sooner than expected after the sheer softening of the US Producer Price Index (PPI) led by lower gasoline prices.

S&P500 futures are showing marginal losses in the Asian session after a bullish Thursday, indicating a minor caution amid the overall upbeat market mood. The US Dollar Index (DXY) has shown a minor recovery to near 100.60 as investors booked short positions, however, the downside bias is still solid.

The Euro is gaining traction as investors are divided about the scale of an interest rate hike by the European Central Bank (ECB). Governing Council member Bostjan Vasle said that they are considering 25 and 50 basis points (bps) rate hike options for the May policy meeting, per Reuters. He further added, "Headline inflation is coming down but we are all focused on core inflation, which is still moving in the wrong direction.

On a two-hour scale, the shared currency pair delivered a breakout of the Rising Channel, which indicates the enormous strength of Euro bulls. The asset rallied after testing the breakout and printed a fresh annual high at 1.1068. Advancing 20-period Exponential Moving Average (EMA) indicates that 1.1010 indicates that the upside momentum is extremely solid.

The Relative Strength Index (RSI) (14) is hovering in the bullish range of 60.00-80.00, solidifying more upside ahead.

A healthy correction to near the 20-EMA will be a good bargain for investors, which will drive the asset to an annual high at 1.1068, followed by the round-level resistance at 1.1100.

In an alternate scenario, a decisive break below April 13 low at 1.0977 will drag the asset towards April 12 low at 1.0915 and April 10 low at 1.0837.

EUR/USD two-hour chart