Ahead of the US midterm elections, EURUSD declines little but keeps parity

After touching Monday's high of 1.0031 during the Tokyo session, the EURUSD pair has experienced a slight pullback. Minor selling activity has come from the exhaustion of the asset's upside momentum, but the asset nevertheless maintains parity as the overall risk impulse remains positive.

In the meantime, the US dollar index has rebounded dramatically from 110.05 as investors become more cautious in front of the US midterm elections. In Tokyo, S&P500 futures are exhibiting a flat-to-positive trend following a bullish Monday amid market optimism.

In contrast, 10-year US Treasury yields have risen to 4.22 percent following the hawkish remarks of Richmond Federal Reserve (Fed) President Thomas Barkin. The Fed official believes the steady pace of policy tightening will continue until there are indications of a reduction in inflationary pressures. It would have made sense for the Fed to begin tightening earlier, he noted.

The outcome of the midterm elections in the United States will have a big impact on the DXY and reveal the degree of political stability in the economy. Consequently, the competition for the 435 seats in the House of Representatives and the 34 seats in the Senate will be closely monitored.

The publication of the US inflation rate later this week will remain a focal point. Due to rising interest rates and a decline in fuel costs, inflationary pressures are anticipated to ease.

On the front of the Eurozone, investors await Retail Sales data. The economic figures may stay negative at -1.3%, but will improve from -2.0% previously. Despite escalating pricing pressures, declining retail sales signal a severe decline in retail demand.