• EUR/USD is hovering around 1.0720, eyes 1.0750 amid a recovery in investors’ risk appetite.
• Fed could pause further rate hikes to restore confidence among the market participants.
• ECB Lagarde confirms that Eurozone banks' exposure to Credit Suisse was in Euro millions, not billions.

The EUR/USD pair is displaying a sideways performance around 1.0720 in the early Asian session. The major currency asset is expected to extend its journey toward the critical resistance of 1.0750 ahead. The shared currency pair has registered a three-day winning streak and is expected to extend further as investors are skeptical about the interest rate decision by the Federal Reserve (Fed), which is scheduled for Wednesday.

A late recovery in S&P500 allowed it to settle Monday’s session on a decent positive note. It seems that investors cheered the collaborative efforts made by various financial institutions to rescue the First Republic after the collapse of Silicon Valley Bank (SVB) and Signature Bank. The recovery move by United States equities is portraying a decent attempt for bulls to settle their feet.

The US Dollar Index (DXY) is expected to settle on a negative note consecutively for the third time as investors are still ambiguous about Fed’s monetary policy.

As per the CME Fedwatch tool, more than 76% odds are in favor of a 25 basis point (bps) interest rate hike, which would push rates to 4.75-5.00%. However, the efforts by various central banks to safeguard the global economy from potential banking turmoil indicate that Fed chair Jerome Powell could pause further rate hikes to restore confidence among the market participants.

The discussions over the interest rate guidance could soften the US Dollar for a longer period. Economists at Scotiabank believe that the US Dollar could weaken if the market believes that the Fed is near to end of its tightening cycle.

On the Eurozone front, positive commentaries from European Central Bank (ECB) President Christine Lagarde and other policymakers fueled strength in the Euro. ECB Lagaqrde told European Parliament's Committee on Economic and Monetary Affairs on Monday that Eurozone banks' exposure to Credit Suisse was in Euro millions, not billions, per Reuters.