- EUR/USD is facing hurdles in extending the rally above 1.0870 ahead of Fed-ECB policy.
- A decline in US Employment Cost Index has bolstered the odds of a smaller interest rate hike by the Fed.
- Investors should brace for a bigger interest rate hike by the ECB as the inflationary pressures are still solid.
The EUR/USD pair is showing signs of a loss in the upside momentum after reaching to near the immediate resistance of 1.0870 in the early Tokyo session. The shared currency pair has already displayed a responsive buying action after dropping to near the round-level support at 1.0800 but is failing to bring initiative buyers on board, however, more upside is still on cards.
The rationale behind the strength of the Euro is the improved risk appetite of the market participants. Risk-perceived assets like S&P500 witnessed stellar demand after the United States Bureau of Labor Statistics showed that the Employment Cost Index for the fourth quarter of CY2022 has landed lower than expectations. The economic data was recorded at 1.0% lower than the consensus of 1.1% and the prior release of 1.2%.
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