EUR/USD sees upside above 1.0050 despite soaring hawkish Fed bets

The EUR/USD pair attempted an upside break above the three-day consolidation formed in a narrow range of 0.9950-1.0020 in the last week. The asset is expected to generate gains as a break above 1.0040 will confirm the conclusion of the inventory accumulation process. The major is displaying signs of strength despite the rising odds of a bumper rate hike announcement by the Federal Reserve (Fed).

Considering the market consensus, Fed chair Jerome Powell will push the interest rates higher to 3.25-3.50% with a third consecutive rate hike by 75 basis points (bps). As price pressures have rebounded and are not responding well to the ongoing pace of interest rates, the extent of the rate hike is open to a whole per cent rate hike.

In the prior, US Consumer Price Index (CPI) release, the core inflation improved dramatically to 6.3%, higher than the expectations of 6.1% and the prior release of 5.9%. Also, the US Retail Sales landed at 0.3%, higher than the expectations of 0% and the prior release of -0.4%. This indicates that a revival in the demand prospects is not caring for the price rise index, which is supporting the Fed to go conservative unhesitatingly.

On the Eurozone front, investors are awaiting the release of Thursday’s Consumer Confidence data.  The economic data is seen lower at -26 against the prior release of -24.9. Consumers are upset over the inflation chaos and signs of failure by the European Central Bank (ECB) in dealing with the same. A decline in consumer confidence indicates a loss of confidence in the economy. This is the outcome of bleak growth prospects, soaring inflation, and deepening energy prices.