The EUR/USD pair is approaching swiftly towards the round-level resistance of 1.0900 in the Asian session. The major currency pair has extended its rally above 1.0880 as investors have digested the expectations of one more 25 basis points (bps) rate hike from the Federal Reserve (Fed). The upbeat market mood has forced the US Dollar Index (DXY) for an extended correction.

The USD Index has slipped further to near 102.33 amid positive market sentiment. Meanwhile, S&P500 futures have generated some gains ahead of the quarterly result season. As per Refinitiv estimates, S&P500 is expected to report a shrinkage in profits by 5.2% vs. a growth forecast of 1.4% anticipated at the start of the year.

Higher rates by the Fed and tight credit conditions by US commercial banks have forced investors to downgrade growth for S&P500.

The declining USD Index has supported demand for US government bonds. This has led to a decline in the 10-year US Treasury Yields to 3.40%.

The US Dollar is expected to remain highly volatile as investors are awaiting the release of Wednesday’s Consumer Price Index (CPI) data. Analysts at TD Securities expect the headline inflation to rise by 0.1% in March, and the core CPI by 0.4%. They see the CPI slowing to 3.6% by the fourth quarter.

On the Eurozone front, the Euro will be impacted by Retail Sales (Mar) data. Monthly Retail Sales data could contract by 0.8%. And, annual Retail Sales could contract further to 3.5%. The street is very much confident about economic recovery in the shared continent amid a shortage of labor, which indicates optimal utilization of capacities by firms.