- EUR/USD is aiming to extend recovery above 1.0150 as DXY is displaying a subdued performance.
- Expectations of a slowdown in retail demand and employment generation have restricted DXY’s upside.
- The energy crisis in Eurozone may escalate as Winter is coming.
The EUR/USD pair is advancing strongly in the Asian session as the US dollar index (DXY) is displaying a subdued performance ahead of the interest rate decision by the Federal Reserve (Fed). The asset has displayed a bullish open-drive move on Wednesday as the pair is driving higher right from the first tick of the trading session. The shared currency bulls are likely to expand gains if the asset manages to surpass the immediate hurdle of 1.0150.
Usually, the DXY remains extremely bullish ahead of the Fed monetary policy meeting as an interest rate hike has remained imminent this year to contain a higher inflation rate. No doubt, a rate hike announcement, most probably by 75 basis points (bps) is in the limelight. However, the DXY is displaying a weak performance.
The rationale behind the weak performance of the DXY is the soaring odds of a recession in the US economy. Employment generation is under threat as many big tech companies are planning a lay-off this year and the retail demand has trimmed significantly, which could be calculated after observing dismal Walmart earnings and a steep fall in US Consumer Confidence.
On the eurozone front, escalating energy supply worries after Russia closed the main pipeline for exporting energy to Europe has spooked the investing community. The core member Germany which has a significant dependence on oil and energy from Russia will face the heat. Also, the upcoming Winter season may highlight the energy crisis. In spite of that, the shared currency bulls are performing well against the greenback.
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