EUR/USD may consolidate around 1.1100 ahead of ECB’s interest rate decision

• EUR/USD is juggling around 1.1100 as investors await ECB’s monetary policy announcement.
• The risk-on impulse has underpinned the shared currency against the greenback.
• ECB may tap a status-quo on the expectation of higher inflation along with a stagnant growth rate.

The EUR/USD has witnessed a juggernaut rally after forming a base in a range of 1.0807-1.0942. The major has observed a bullish reversal after hitting a fresh 23-months low near 1.0810. Euro bulls regained their mojo as the undertone of the market turned positive after Ukrainian President Volodymyr Zelenskyy admitted to agreeing on a diplomatic solution. A situation of ceasefire has been underpinned on the headline of a compromise by Kyiv.

The shared currency found the bids after Zelenskyy agreed to compromise on the stipulations of Russian leader Vladimir Putin. The former will withdraw its membership application from NATO and will recognize the pro-Russian regions as ‘independent’, declared by Moscow before the invasion of Ukraine.

EUR/USD is likely to consolidate after a fancy rally as investors are waiting for the announcement of interest rate policy by the European Central Bank (ECB), which is due on Thursday. It is worth noting that the ECB has not followed the footprints of other central banks and has kept the interest rates at floor levels. The decision is likely to remain unchanged today on rising expectations of stagflation in the Eurozone.

Meanwhile, the US dollar index (DXY) has slipped below 98.00 amid fading safe-haven appeal in the market. Furthermore, investors are cautious over the disclosure of US Consumer Price Index (CPI) numbers, which may dictate the likely monetary policy action by the Federal Reserve.