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Title : EUR/USD spikes above 0.9730 as DXY skids, ECB Lagarde’s speech/Fed minutes in focus

OCT 12, 2022 12:27 AM ET


The EUR/USD has pushed strongly above the immediate 0.9700 hurdle and refreshed its high of the day at 0.9734 in the Tokyo session.

The risk profile remains averse as S&P500 futures continue to consolidate.Meanwhile, the US dollar index (DXY) has suffered a deep pullback after failing to hold new weekly highs around 113.60 and has fallen to near 113.00.

For overall risk appetite to improve, more filters are needed to confirm the fading of negative market sentiment. In addition, 10-year U.S. Treasury yields have fallen to near 3.91 after failing to clear the critical 4% hurdle.

On Wednesday, the release of the Federal Reserve (Fed) minutes will take center stage. The Fed minutes will elaborate on the announcement of the third interest rate hike by 75 basis points (bps). The minutes will also provide the views of all Fed policymakers on interest rate targets to achieve price stability. Apart from that, the economic outlook for the current situation will be of utmost importance.

Following comments from JPMorgan Chase Chairman and CEO Jamie Dimon warning that the US economy could enter a recession in the next six to nine months, comments from US President Joe Biden that "if there is a recession, it will be a very small one" have brought a sigh of relief.

On the European front, investors are looking ahead to a speech by European Central Bank (ECB) President Christine Lagarde. The speech will provide clues about the ECB's likely monetary policy action. In addition, the icing on the cake will be some light on the Russia-Ukraine war situation.

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