Inflation data to drive Euro

The EUR/USD pair moves into positive territory after trimming intraday losses after the better-than-expected Economic Sentiment data from the Eurozone and Germany. However, the US Dollar (USD) gained strength against the Euro (EUR) as traders exercise caution ahead of the release of inflation data from the United States (US) scheduled for Tuesday.

The Euro faces resistance as speculation mounts regarding potential interest rate cuts by the European Central Bank (ECB) at the start of the second quarter. Comments from ECB Executive Board member Piero Cipollone indicated that there may not be a need for the ECB to further restrict demand in its efforts to address inflation, suggesting that interest rates might not need to be raised further.

The US Dollar Index (DXY), tracking the USD against a basket of six major currencies, maintains its upward trajectory for the second successive session. Expectations of inflationary pressures in the United States are driving speculation that the Federal Reserve (Fed) will refrain from cutting interest rates at the upcoming March meeting. This sentiment is bolstering the attractiveness of the US Dollar relative to the Euro.