EUR/USD erases NFP gains as focus shifts to US CPI data

EUR/USD has erased the gains it made after Friday's US nonfarm payrolls report, as the dollar stabilizes and traders shift their focus to this week's US consumer price index data.

The US dollar came under pressure late last week after the NFP report, which was not weak but triggered a slightly dovish repricing in interest rate expectations. The probability of a July rate hike now stands at just 24%, while the chances of a move in September have dropped to 55%. This repricing weighed on the dollar and gave EUR/USD a temporary boost. However, the pair has since given back those gains, trading back near the 1.0900 level as the market consolidates.

For foreign exchange traders, the key driver this week will be the US CPI data, given the Federal Reserve's focus on inflation. A softer CPI print could reinforce the dovish repricing and push the dollar lower, while a hot number would revive rate hike expectations and support the greenback. The interest rate differential between the US and the eurozone remains a critical factor for EUR/USD direction. Traders can monitor real-time FX quotes on NowPrice for the latest levels.

This week's calendar is light, with Fed Governor Waller speaking today. Unless he explicitly endorses rate hikes, the price action is likely to remain rangebound ahead of the CPI release. The eurozone data calendar is also sparse, leaving EUR/USD at the mercy of dollar sentiment and risk appetite. A break above 1.0950 or below 1.0850 could signal the next directional move, but the CPI release on Wednesday is the main event that will likely determine the near-term trend.