EUR/USD JUGGLES BELOW 1.0800 AMID SUBDUED USD, GEOPOLITICAL TENSIONS RENEW

The EUR/USD pair is displaying a back-and-forth action below 1.0800 in the Tokyo session. The major currency pair has turned sideways following the footprints of the subdued US Dollar Index (DXY), which is struggling to extend upside despite upbeat preliminary S&P Global PMI and expansion of financial support for mid-size United States banks.

S&P500 futures have added significant gains in the Asian session. The 500-US stocks futures basket has carry-forwarded positive bias observed on Friday as investors have cheered the consideration of the expansion of the emergency lending facility to small US banks to maintain their liquidity obligations. The alpha generated on 10-year US Treasury bonds is still below 3.38% as the street believes that Federal Reserve (Fed) chair Jerome Powell won’t hike rates dramatically ahead.

Minneapolis Fed president Neel Kashkari cited on Sunday, “Recent stress in the banking sector and the possibility of a follow-on credit crunch brings the US closer to recession. It definitely brings us closer." It would be a tough call from the Fed to bring more interest rates if recession fears are potential.

On the global front, Russia-Ukraine tensions have renewed again as President Vladimir Putin said on the weekend that Russia plans to station tactical nuclear weapons in neighboring Belarus. He further added, “We're not transferring our nuclear weapons to Belarus but will station them there as the US does in Europe.”

In Eurozone, households are facing immense pressure due to galloping inflation. A massive strike in Germany was set to begin early Monday, crippling mass transport and airports in one of the biggest walkouts in decades as Europe's largest economy reels from soaring inflation, as reported by Reuters. The European Central Bank (ECB) is working hard to bring down red-hot inflation, however, the catalyst is extremely sticky led by a shortage of labor.