• EUR/USD is facing hurdles in stretching its rally above 1.1000 as USD Index has attempted a recovery
• S&P500 futures have recovered losses generated in early Asia, portraying a recovery in the risk appetite.
• Monthly US Retail Sales data is expected to maintain its pace of contraction by 0.4%.

The EUR/USD pair is facing resistance in extending its rally above the psychological resistance of 1.1000 in the Asian session. The shared currency pair is struggling to accelerate further as the US Dollar index (DXY) has defended further downside after testing its weekly low of 101.44.

The major currency pair displayed a stellar north-side move on Wednesday after United States inflation landed lower as expected. Weak gasoline prices in March were a major catalyst for the extensive softening of the headline Consumer Price Index (CPI) to 5.0%. While core CPI that excludes oil and food prices rebounded to 5.6% as rent prices remained persistent.

Also, the release of Federal Reserve (Fed) minutes strengthened the downside bias for the USD Index. Fed minutes conveyed that 25 basis points (bps) interest rate hike was a last-minute move as policymakers were in favor of a 50 bps rate hike. The Fed decided to go light on interest rates due to banking turmoil.

Meanwhile, S&P500 futures have recovered losses generated in early Asia and have turned positive, at the time of writing, portraying a recovery in the risk appetite of the market participants. It seems that investors are digesting fears of a mild recession, which is anticipated by Fed policymakers later this year as per Federal Open Market Committee (FOMC) minutes.

Going forward, US Retail Sales data will remain in the spotlight. Monthly Retail Sales data is expected to maintain its pace of contraction by 0.4%.

On the Eurozone front, rising oil prices are posing a threat of recovery in inflationary pressures. The shared continent is a major importer of oil and higher oil prices could fuel inflation again. This might force the European Central Bank (ECB) to hike rates further.

ECB Governing Council member Robert Holzmann cited on Wednesday, “Inflation outlook argues for another 50bps hike in May.” He further added, “ECB needs to keep raising rates noticeably beyond May.”