EUR/USD gathers strength around the mid-1.0800s on a softer US Dollar

The EUR/USD pair kicks off the new week on a positive note during the early Asian trading hours on Monday. The uptick of the major pair is supported by the weaker US Dollar (USD). Investors will closely watch the European Central Bank (ECB) monetary policy meeting on Thursday, with no change in rate expected. At press time, EUR/USD is trading at 1.0845, adding 0.07% on the day. 

Several Federal Reserve (Fed) policymakers said the timing of interest-rate cuts will depend on incoming economic data. Boston Fed President Susan Collins and New York’s John Williams stated that the first rate cut will likely be appropriate later this year, while Atlanta’s Raphael Bostic said he expected an easing policy this summer. 

The US Manufacturing PMI fell to 47.8 in February from the previous reading of 49.1, below the market consensus, according to the Institute for Supply Management (ISM). The New Orders Index dropped to contractionary territory at 49.2, while the Production Index came in at 48.4, and the Employment Index arrived at 45.9.

The ECB wants to see additional data on easing wage pressures before considering the monetary policy stance. The ECB is likely to leave interest rates unchanged at its March meeting. Investors will take more cues from the press conference about the policy outlook. The hawkish remarks from the central bank could lift the Euro (EUR) and act as a headwind for the EUR/USD pair. 

Moving on, the Eurozone Services PMI will be due on Tuesday. German Trade data and Eurozone Retail Sales will be released on Wednesday. The stronger-than-expected data could alleviate fears of a Eurozone recession. The ECB interest rate decision will take center stage on Thursday, ahead of the highly-anticipated US Nonfarm Payrolls (NFP).