EUR/USD juggles in a 1.0780-1.0800, focus shifts on Fed’s Powell and ECB’s Lagarde speech

• EUR/USD is inside the woods as the DXY steadies around 101.00.
• Higher energy bills have forced the ECB to keep a neutral stance on the policy rates.
• The Fed has also opened doors for a 75 bps rate hike.

The EUR/USD pair is trading directionless in a narrow range of 1.0780-1.0798 as the US dollar index (DXY) steadies after attacking the round level resistance of 101.00 in the Asian session. The market participants are awaiting the dictations from Federal Reserve (Fed) chair Jerome Powell and European Central Bank (ECB)’s President Christine Lagarde, which are due on Thursday.

The asset has been trending lower this month amid the diverted path of the Fed and ECB towards their respective interest rate policies. On one side, the Fed seems in dilemma between featuring the interest rate hike by 50 basis points (bps) or 75 bps as a rate hike is imminent to contain the inflation mess.

Meanwhile, the supply chain bottlenecks and rising energy bills have left no other option for the ECB than to stick with a neutral stance. The Ukraine crisis after Russia’s invasion has resulted in sluggish growth in the eurozone, which is expected to stay for a longer period. Higher energy bills are reducing the real income of the households and henceforth their confidence in the European economy. This has also triggered fears of stagflation in Europe, which will make the decision-making for the ECB more complex.

In the Europe session, investors will keep an eye on the release of the Euro’s Industrial Production. The monthly Industrial Production is expected to land at 0.7% while the catalyst on yearly basis may print at 1.5%.