EUR/USD establishes above 1.0000 ahead of Eurozone inflation

The EUR/USD pair has defended the immediate support of 1.0017 and is now expected to attempt a break above the critical resistance of 1.0030. The asset is broadly trading sideways in a 0.9982-1.0056 range and may deliver a decisive move after the release of the European Central Bank (ECB)’s preferred inflation tool. The eurozone Harmonized Index of Consumer Prices (HICP) is seen higher at 9%, than the prior release of 8.9%.

Soaring energy prices in the eurozone after the restricted deliveries from Russia are responsible for accelerating price pressures. Also, higher expectations for inflation rate are strengthening the odds of a bumper rate hike by the ECB in its monetary policy meeting next week.

Also Read: Eurozone Inflation Preview: Hotter HICP to cement a 75 bps ECB hike next week

Meanwhile, unscheduled maintenance of the Nord Stream 1 pipeline under the Baltic Sea from Russia has escalated the odds of an energy crisis in Germany. The German energy market is already vulnerable and more energy supplies cut for three days will worsen it further. Investors should be aware of the fact that Germany is a core member of the European Union (EU) and the energy crisis in Germany could dampen investors’ appetite for the shared currency.

Meanwhile, the US dollar index (DXY) is displaying a subdued performance on lower consensus for US Automatic Data Processing (ADP) Employment Change data. The economic data is expected to land at 200k while the US economy added 528k jobs last month. As the US economy is operating at full employment levels, room for more job additions is squeezed and the addition of decent payrolls is still satisfactory.