The euro has dropped below the critical support level of 1.0900 against the US dollar during the Asian trading session. As investors get jittery before the release of U.S. Inflation data, the main currency pair has garnered large offers. The Federal Reserve’s interest rate decisions are widely anticipated to be informed by the release of US inflation data.

As international tensions rise, S&P500 futures have taken a downward turn. According to the Taiwanese government, tensions between China and Taiwan have escalated to the point that China has stationed 58 aircraft around Taiwan Island. A lack of interest in traditionally risky assets is a symptom of a general trend toward risk aversion.

As investors’ expectations are heavily weighted toward aggressive Fed policy, the US Dollar Index (DXY) has returned to its high of 102.21. CME Fed watch indicates that 66% of wagers favour a rate hike by Fed head Jerome Powell of 25 basis points (bp).

The US inflation report for March will be closely monitored on Wednesday. While falling oil prices in March suggest continued moderation in headline inflation, rising labour cost index data suggest a comeback in the core Consumer Price Index (CPI) that excludes food and energy. Companies in the United States had to increase salaries because of the severe competition for workers. As a result, households were given more money to spend.

Data on retail sales in the Eurozone will be closely scrutinized. The predicted decrease in March retail sales of 0.8% compared to February’s 0.3% growth. And yearly Retail Sales would fall by 3.5 per cent, from a previous drop of 2.3 per cent.

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However, market participants are expected to hold off on making substantial wagers until after they see the US inflation figures for March.