Euro climbs towards 1.1200 as US Dollar weakens ahead of US CPI

Euro advances towards 1.1200 as lower oil prices weigh on the US Dollar.
With diplomatic efforts under way, Trump plays down the prospect of fresh strikes on Iran.
Persistent inflation risks keep expectations of Fed and ECB rate hikes in the spotlight.

Gains in EUR/USD on Monday reflect a softer US Dollar (USD) as oil prices retreat, while traders assess the latest developments in US-Iran diplomacy. The pair is trading near 1.1203 at the time of writing, a gain of 0.55% for the day.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

West Texas Intermediate (WTI) is trading near $86.85 a barrel, more than 3% lower on the day, as US President Donald Trump downplayed the prospect of fresh strikes on Iran. In Washington, DC, Qatar’s prime minister is holding talks with President Donald Trump and Vice President JD Vance on efforts to bring the conflict to an end.

A diplomatic breakthrough, however, is still uncertain. According to Tehran, progress towards peace requires Washington to lift its naval blockade, release seized assets and remove sanctions. Oil prices may find it difficult to extend their decline if the talks fail to make headway, leaving inflation risks in focus across both the US and the Eurozone.

With US economic growth proving resilient and the labour market remaining firm, the Federal Reserve (Fed) has scope to increase interest rates further as policymakers work to return inflation to their 2% target.

October’s US Nonfarm Payrolls (NFP) increase of 165K was more than double the forecast of 65K, while the Unemployment Rate slipped to 4.1%. According to the CME FedWatch Tool, traders assign roughly an 80% probability to a rate hike in December. Those expectations, and the Dollar’s next move, could be reshaped by this week’s US inflation releases: the Consumer Price Index (CPI) on Tuesday and the Producer Price Index (PPI) on Friday.

At around 101.85, the US Dollar Index (DXY) is down 0.44% for the day. The index measures the Greenback’s performance against a basket of six major currencies.

A December rate increase is also expected by traders in the Eurozone. After delivering a cumulative 50 basis points (bps) of increases earlier this year, the European Central Bank (ECB) left its deposit rate unchanged at 2.50% in October. Balancing the threat of higher inflation against the possibility of weaker growth, policymakers remain wary of additional tightening.

Higher energy costs were the main driver as Eurozone headline inflation increased from 3.8% YoY in September to 4.0% YoY in October. Core inflation, by contrast, remained unchanged at 2.5%.

How Is the US Dollar Performing Today?

Against the major currencies listed below, the US Dollar (USD) recorded its strongest performance against the Swiss Franc today. The table presents today’s percentage changes for each pairing.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.55%	-0.49%	-0.32%	0.00%	-0.64%	-1.32%	0.10%
EUR	0.55%		0.06%	0.27%	0.55%	-0.09%	-0.77%	0.65%
GBP	0.49%	-0.06%		0.21%	0.48%	-0.17%	-0.83%	0.58%
JPY	0.32%	-0.27%	-0.21%		0.29%	-0.35%	-1.02%	0.39%
CAD	-0.00%	-0.55%	-0.48%	-0.29%		-0.65%	-1.30%	0.10%
AUD	0.64%	0.09%	0.17%	0.35%	0.65%		-0.67%	0.75%
NZD	1.32%	0.77%	0.83%	1.02%	1.30%	0.67%		1.43%
CHF	-0.10%	-0.65%	-0.58%	-0.39%	-0.10%	-0.75%	-1.43%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the US Dollar on the left and following that row across to the Japanese Yen gives the percentage change for USD (base)/JPY (quote) in the corresponding cell.