EUR/USD refreshes day’s high above 1.0080 ahead of ECB Lagarde’s speech

The EUR/USD pair has displayed a juggernaut rally in the Asian session after overstepping the 1.0000 parity with significant force. The asset has refreshed its intraday high at 1.0080 and more gains are expected ahead of the speech from European Central Bank (ECB) Christine Lagarde. The major is witnessing a bullish open-drive trading session in which every pullback is considered as a buying opportunity for the market participants.

EUR/USD is catching immense bids as the US dollar index (DXY) is falling like a house of cards. The DXY has surrendered the critical support of 109.00 and is declining further on expectations of shrinkage in the US inflation data, which will release on Tuesday.

The comments from US Treasury Secretary Janet Yellen on the inflation rate, citing that weaker gasoline prices may put further downward pressure on headline consumer price inflation for August, reported by Reuters, are discounted by the market participants. A consecutive decline in the headline Consumer Price Index (CPI) data will confirm that the inflationary pressures are responding inversely to the higher interest rates by the Federal Reserve (Fed).

However, a consecutive decline in the inflation rate is not sufficient to trim the odds for a 75 basis point (bps) interest rate hike as the current price rise index is still extremely deviated from the desired rate of 2%.

On the eurozone front, the interest rate hike of 75 bps by the ECB has trimmed the Fed-ECB policy divergence. The decision of bumper rate hike by the ECB is taken on cost of growth prospects as the trading bloc is expected to expand with an extremely lower growth rate.