Ella 
EUR/USD attracted some buyers in early Asian trading on Monday. EUR/USD rebounded from multi-week lows of 1.0876 to hover around 1.0948, up 0.09% on the day.
The Fed faces a policy inflection point, supported by easing inflation but not necessarily aggressive rate cuts. Investors will look to Thursday’s U.S. inflation data for more signs of price pressures. Markets expect headline CPI to rise at an annual rate of 3.2%, while core CPI is expected to slow to an annual rate of 3.8%.
Friday’s U.S. labor data cast doubt on financial markets’ expectations that the Federal Reserve will begin cutting interest rates in March. The U.S. Department of Labor announced on Friday that U.S. nonfarm payrolls (NFP) increased by 216,000 in December from 173,000 in November, higher than the 170,000 expected.
Investors will focus on the euro zone’s November retail sales monthly rate released on Monday, which is expected to be -0.3%, compared with 0.1% in October; the annual rate is expected to be -1.5%, compared with -1.2% in October. Still, last week’s sluggish German retail sales signaled downside risks for the indicator.
German retail sales in November, reported last Friday, were lower than expected, with the annual rate falling to 2.4% from -0.1% in the previous month. The monthly rate was -2.5%, compared with the previous value of 1.1%. In addition, the harmonized consumer price index in the euro zone was at an annual rate of 2.9% in December, compared with 2.4% previously; the core consumer price index was at an annual rate of 3.4%, compared with 3.6% previously. Both figures were below expectations.
Market participants will be closely watching the German trade balance and euro zone retail sales for November due out next Monday. Later in the week, U.S. Consumer Price Index will be released on Thursday and U.S. Producer Price Index for December on Friday. These data will provide direction for EUR/USD.
