EUR/USD teases 1.22 on USD pullback, German HICP inflation eyed

EUR/USD reverses Friday’s losses whilst bulls step back from the intraday top.
Off in the US, stimulus hopes propel risk-on mood, drag DXY.
Germany’s Preliminary HICP for May keeps reflation fears on the table but not signaling ECB to become Fed.
Risk catalysts are going to be on the driver’s seat amid long weekends within the US, the UK.
EUR/USD extends Friday’s recovery moves to 1.2205, up 0.07% intraday, heading into Monday’s European session. The currency major pair dropped to rock bottom in a fortnight the previous day before bouncing off 1.2132 amid the market’s risk-on mood that favors the buyers amid a quiet session backed by a US long weekend in American and Britain. However, cautious sentiment before Germany’s preliminary Harmonized Index of Consumer Prices for May seems to check the bulls lately.

A stronger than expected figure of the Fed’s preferred gauge of inflation, Core Personal Consumption Expenditure (PCE) price level, propelled the reflation woes and favored the US dollar index (DXY) on Friday. However, the subsequent announcement from US President Joe Biden, concerning $6.0 trillion of budget and upbeat GDP forecasts, trimmed the safe-haven bid of the US dollar.

The risk-on mood extends to Monday as Biden stretched the infrastructure spending talks to June and China flashes mixed PMI data amid a quiet session.

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