EUR/USD eyes 1.0700 as ECB expects no calm in rates as German Inflation picks air

• EUR/USD is aiming to reclaim the 1.0700 resistance as the risk-off mood has faded.
• The Fed needs not to be in a hurry to calm down the policy-tightening spell.
• A rebound in German inflation has bolstered the case of 50 bps rate hike continuation.

The EUR/USD pair has turned sideways after failing to recapture the round-level resistance of 1.0700 in the late New York session. The major currency pair is expected to recapture the aforementioned resistance as the risk-off mood has faded after hopes of recovery in China post the release of the Caixin Manufacturing PMI overshadowed the risk of a global recession.

S&P500 settled Wednesday’s session with some losses after Federal Reserve (Fed) policymakers sounded hawkish while delivering guidance on interest rates. The US Dollar Index (DXY) has retreated to near 104.00 after failing to extend recovery above 104.20, portraying mix market mood. Meanwhile, the demand for US government bonds remained extremely weak, which led to a jump in the 10-year US Treasury yields to 4%.

Atlanta Fed President Raphael Bostic expected the central bank to push the terminal rate to the 5.00%-5.25% range as the United States Consumer Price Index (CPI) is extremely sticky. Apart from that, the Fed policymaker expects the central bank to keep the elevated terminal rate stable well into 2024.

Meanwhile, the release of the US ISM Manufacturing PMI gamut claimed that the inflationary pressures have rebounded and the Fed should not be in a hurry to calm down the policy tightening spell.