Ella 
In early Asian trading on Monday, EUR/USD strengthened around 1.0710. The US dollar remains weak, below the 106.00 mark, providing some support for EUR/USD. The preliminary value of Germany’s April consumer price index (CPI) will be released on Monday. The focus will be on Wednesday’s Federal Reserve monetary policy meeting, which is expected to remain on hold.
Recent U.S. inflation data has reduced market expectations that the Federal Reserve will start cutting interest rates. The odds of a rate cut before the July meeting fell to 25% from 50% last week, while traders have priced the odds of a rate cut at the September meeting at nearly 60%, the CME FedWatch tool showed. This could therefore boost the US dollar and limit EUR/USD upside in the short term.
Data released by the Bureau of Economic Analysis last Friday showed that the annual rate of the U.S. PCE price index in March was 2.7%, compared with the previous value of 2.5%, which was higher than the expected 2.6%. The U.S. core PCE price index, the inflation gauge favored by the Fed, rose at an annual rate of 2.8% in March, above expectations of 2.6%. In March, the US PCE price index and core PCE price index both increased by 0.3% on a monthly basis.
