The EUR/USD Maintains Its Gains Near 1.0770, And US CPI Data Is Anticipated

The EUR/USD pair begins the week on a positive note during Monday's early Asian trading session. The convergence of the US Dollar (USD) subsequent to more robust-than-anticipated US employment data supports the pair's recovery. The main pair is trading at 1.0770 at press time, an increase of 0.06% on the day.

According to data released by the US Bureau of Labour Statistics (BLS) on Friday, the US labour market improved in November due to higher wages, reduced unemployment, and growth that met expectations. Immediately, Treasury bond yields increased significantly as investors speculated that the report might persuade the Federal Reserve (Fed) to postpone rate reduction in 2024.

The US Nonfarm Payrolls (NFP) increased their workforce by 199K, which surpassed the 180K increase anticipated by the market. In the interim, there was a decrease in the unemployment rate from 3.9% to 3.7%, and the average hourly wage remained constant at 4.0% the previous year.

In accordance with market expectations, German inflation data, as determined by the Harmonised Index of Consumer Prices (HICP), was 2.3%. The markets anticipate that beginning in March 2024, the European Central Bank (ECB) will begin to reduce interest rates until inflation returns to target in a timely fashion.

This week will be dominated by the Federal Open Market Committee (FOMC) and the ECB monetary policy meeting. Market participants will base their pre-event decisions on the US Consumer Price Index (CPI), which is scheduled for release on Tuesday. It is anticipated that the annual inflation rate will decline from 3.2% to 3.1% in November, whereas the core inflation rate will remain unchanged at 4.0 percent year-over-year.