EUR/USD holds positive ground above 1.0700, eyes on German CPI data

The EUR/USD pair trades on a stronger note around 1.0710 during the early Asian trading hours on Monday. The weaker US Dollar (USD) below the 106.00 mark provides some support to the major pair. The first reading of the German Consumer Price Index (CPI) for April is due on Monday. All eyes will be on the Federal Reserve monetary policy meeting on Wednesday, with no change in rate expected. 

The recent US inflation data dialed back their expectation of when the Federal Reserve (Fed) will start cutting interest rates. According to the CME FedWatch tool, the chance of a rate cut by the July meeting falls from 50% last week to 25%, while traders have priced in nearly 60% odds that the Fed will cut the interest rate at its September meeting. This, in turn, might lift the Greenback and cap the upside of the EUR/USD pair in the near term. 

The US Bureau of Economic Analysis revealed on Friday that the Personal Consumption Expenditures (PCE) Price Index rose by 2.7% YoY in March, compared to the previous reading of 2.5%, above the 2.6% estimated. The Core PCE figure, the Fed's preferred inflation measure, held steady at 2.8% YoY in March, firmer than the 2.6% expected. On a monthly basis, both headline PCE and the core PCE Price Index rose 0.3% in March.

Across the pond, the European Central Bank (ECB) emphasized cooler inflation in the Eurozone and signaled that the ECB might cut interest rates before the Fed. ECB President Christine Lagarde hinted that the central bank is still likely to begin lowering its deposit rate from a record-high 4% in June, but has been careful to leave open its options for the path beyond.