Euro struggles below 1.10

The EUR/USD pair is oscillating in a narrow range around 1.0940 in the late Asian session. The major currency pair is failing to move in either direction as market participants remain divided about the further roadmap on interest rate direction by the Federal Reserve (Fed).

The US Dollar Index (DXY) is also showing a sideways performance as investors are mixed about further policy rate guidance by the Fed. Last week, Fed chair Jerome Powell allowed interest rates to remain steady and left them on hold but delivered hawkish guidance citing that two small interest rate hikes are appropriate later in the year.

Considering the US economic outlook and softening US consumer inflation expectations, the street believes that the Fed might announce only one rate hike this year, according to the CME Fedwatch tool. On Friday, preliminary five-year consumer inflation expectations were softened to 3 percent vs. the estimates and the prior release of 3.0 percent while current consumer and producer inflation has softened sharply due to lower gasoline prices.

Apart from that, US labour market conditions have softened sharply as firms are facing pressure from higher interest rates and tight credit conditions by US regional banks which is one of the main  requisites why the Fed might be done with their rate hiking cycle.

On the Eurozone front, one more interest rate hike by the European central bank (ECB) has pushed interest rates to 4 percent and ECB President Christine Lagarde decided to downplay the bleak economic prospects in Eurozone ad continued its battle against persistent inflation.