The Euro-dollar pair shows modest growth in the early Asian session on Monday. Due to the lack of important economic data from the US due to the Martin Luther King Jr. holiday, risk sentiment is expected to remain the main factor driving the price movement of the major pair. EUR/USD is currently trading near 1.0953, up 0.03% for the day.

European Central Bank (ECB) officials stressed the need to wait for more economic data before making decisions on rate normalization. On Saturday, ECB chief economist Philip Lane said the central bank will have important data by June to decide on a likely series of interest rate cuts, but premature action could prove self-justifying. Last week, ECB President Christine Lagarde said the “hardest and scariest” on inflation is likely behind us and interest rates will be cut if the ECB is confident inflation has fallen below 2%.

On the other side of the ocean, the U.S. Producer Price Index (PPI) unexpectedly fell in December, prompting speculation that the Federal Reserve (Fed) will start cutting interest rates this year. According to data released Friday by the Bureau of Labor Statistics, the PPI rose 1.0% year-over-year in December, up from November’s 0.8%, while the core PPI was unchanged for the month, bringing the annual increase down to 1.8% from 2.0%. Given the signal of lower inflation, investors expect additional monetary policy easing through 2024. Markets are betting on a 160 basis points (bps) Fed rate cut this year.

Recommendations: Trade in the channel 1.0900 – 1.1000 on bounces from the levels