Ella 
During early Asian trading on Monday, EUR/USD remained weak, sitting around 1.0770. Ahead of the release of important U.S. economic data this week, investors have shifted into cautious mode and tend to wait and see. On Wednesday, the final U.S. consumer price index (CPI) for April will be in focus, with an annualized increase of 3.4% expected.
Rising consumer inflation expectations have raised market expectations that the Federal Reserve may keep interest rates on hold for longer. Dallas Fed President Lorie Logan said there are upside risks to inflation, adding that it was too early to cut interest rates.
Meanwhile, Minneapolis Fed President Neel Kashkari said he is in “wait-and-see mode” and the threshold for concluding that interest rates need to be raised to tame inflation is “high.” These hawkish comments from Fed officials boosted the US dollar and weighed on EUR/USD.
On the other hand, ECB policymakers noted last month that a rate cut in June was likely as euro zone inflation is expected to slow to 2% next year, based on the description of their April meeting. Markets expect the European Central Bank to cut interest rates on June 6, even if the path to interest rates after that is uncertain. The market is increasingly speculating on an interest rate cut by the European Central Bank and a possible delay by the U.S. Federal Reserve, which may limit the upside of the euro (EUR) and be negative for EUR/USD in the short term.
