Key Event Today:

14:00 UTC: USD – ISM Manufacturing Index.

The EUR/USD pair is trading weakly, hovering around the 1.0787 mark, amidst renewed demand for the U.S. dollar at the start of the Asian session on Monday. The hawkish stance of the Federal Reserve (Fed) on raising interest rates provides some support to the U.S. dollar, impacting the Euro-Dollar pair.

Last Friday, the U.S. Bureau of Economic Analysis reported that the Personal Consumption Expenditure (PCE) Price Index in the U.S. for February rose by 0.3% month-over-month, in line with expectations. Year-over-year, the PCE inflation rate for February increased by 2.5%. Excluding food and energy, the core PCE index rose by 0.3% monthly and 2.8% annually in February, indicating ongoing inflationary pressures which might cause the Fed to delay the start of interest rate cuts this year.

Last week, the Fed maintained interest rates unchanged for the fifth consecutive time, within the range of 5.25 to 5.5%, and continues to anticipate three quarter-point cuts by the end of the year. Current trader estimates give a 55% chance for the first rate cut by the Fed in June, down from nearly 70% last week, according to the CME FedWatch Tool. Fed Chair Jerome Powell stated on Friday that recent U.S. inflation data met expectations, and the Fed’s interest rate target for this year remains unchanged.

Recommendation: Predominantly sell orders from the current price level are advised.