EUR/USD gains ground near 1.0800, ZEW survey, US CPI data eyed

• EUR/USD holds positive ground around 1.0795 on the consolidation of USD.
• ECB’s Panetta said the moment is fast approaching for the ECB to cut rates, gradual steps might help to mitigate the volatility on markets.
• Many Fed officials agreed that the FOMC may review further economic data before lowering interest rates. 

The EUR/USD pair attracts some buyers near 1.0800 during the early Asian trading hours on Monday. Despite the lack of major US data releases last week, many Federal Reserve (Fed) officials and European Central Bank (ECB) policymakers will provide insight into the interest rate outlook later this week. The US inflation and Retail Sales for January will be the highlights this week. At press time, the major pair is trading at 1.0795, gaining 0.07% on the day.

ECB Governing Council member Fabio Panetta stated on Saturday that the moment is fast approaching for the central bank to cut interest rates, and timely and gradual steps might help to mitigate the volatility in financial markets and the economy. Meanwhile, ECB policymaker Mario Centeno said he would like to see interest rates decline gradually and steadily rather than dropping more rapidly. The market expectation for the first cut has moved to June from April previously, and investors have priced in 125 basis points (bps) of total easing over the next 12 months versus 150 bps at the start of the month.

Across the pond, inflation data on Tuesday will take center stage. The headline CPI is forecast at 3.0% YoY vs. 3.4% in December, while the core figure is projected at 3.8% YoY vs. 3.9% in December. The stronger-than-expected data could convince the Fed to delay the easing cycle, and this should help support the US Dollar (USD). Several Fed officials suggested that they want more time to observe whether inflation continues to decline. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins agreed that the FOMC may review further economic data before lowering interest rates.

Moving on, traders will monitor the US January CPI inflation data and the German and Eurozone ZEW surveys on Tuesday for fresh catalysts. The German expectations are expected at 17.5 in February versus 15.2 in January, while the current situation is estimated at -79.0 in February versus -77.3 in the previous reading.

Fed’s Bowman, Barkin, and Kashkari are set to speak on Monday. Goolsbee and Barr are scheduled to speak on Wednesday, while Waller and Bostic will speak on Thursday. Finally,  Barr and Daly will speak on Friday.