The EUR/USD pair is attracting buyers near the 1.0800 mark in the early hours of Asian trading on Monday. Despite the lack of important US data releases last week, many Federal Reserve (Fed) officials and European Central Bank (ECB) policymakers will provide insight into the interest rate outlook later this week. Key data this week will be U.S. inflation and retail sales for January.

ECB Governing Council member Fabio Panetta said on Saturday that the moment for the central bank to cut interest rates is fast approaching and timely and gradual steps could help mitigate volatility in financial markets and the economy. Meanwhile, ECB chief Mario Centeno said he would like to see interest rates cut gradually and steadily rather than quickly. Market expectations for the first rate cut moved to June from April, with investors estimating 125 basis points (bps) of overall easing over the next 12 months versus 150 bps at the start of the month.

Overseas, inflation data on Tuesday will take center stage. Core CPI is forecast at 3.0% y/y vs. 3.4% in December, while core CPI is forecast at 3.8% y/y vs. 3.9% in December. Stronger than expected data may convince the Fed to postpone the easing cycle, which would support the US Dollar (USD). Several Fed officials have said they need more time to observe whether inflation continues to decline. Minneapolis FRB President Neel Kashkari and Boston FRB President Susan Collins agreed that the FOMC could consider additional economic data before cutting interest rates.

Recommendations: Trade predominantly with Buy orders