1.1200 in sight as Euro gains on US Dollar weakness ahead of US CPI

1.1200 in sight for the Euro as lower oil prices weigh on the US Dollar.
With diplomacy continuing, Trump plays down the prospect of fresh strikes on Iran.
Persistent inflation risks keep expectations for Fed and ECB rate rises in focus.

EUR/USD stands near 1.1203 at the time of writing. The pair is up 0.55% on Monday as oil prices retreat and the US Dollar (USD) weakens. Traders are assessing the latest developments in US-Iran diplomacy.

Fresh strikes on Iran are unlikely, US President Donald Trump has suggested. Qatar’s prime minister is visiting Washington, DC, to discuss efforts to end the conflict with President Donald Trump and Vice President JD Vance. Meanwhile, West Texas Intermediate (WTI) is trading near $86.85 a barrel, a daily decline of more than 3%.

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

A diplomatic breakthrough is still far from certain. According to Tehran, progress towards peace requires Washington to lift its naval blockade, release seized assets and remove sanctions. Oil may struggle to extend its decline if talks fail to advance, leaving inflation risks in focus across both the US and the Eurozone.

Robust US growth and a solid labour market leave the Federal Reserve (Fed) scope for further interest rate increases. Policymakers are seeking to return inflation to their 2% target.

October US Nonfarm Payrolls (NFP) increased by 165K, more than twice the forecast of 65K, as the Unemployment Rate slipped to 4.1%. According to the CME FedWatch Tool, traders assign roughly an 80% probability to a December rate rise. This week’s US inflation releases may reshape those expectations and determine the Dollar’s next direction. Tuesday brings the Consumer Price Index (CPI), with the Producer Price Index (PPI) following on Friday.

Down 0.44% on the day, the US Dollar Index (DXY) is trading near 101.85. The index measures the Greenback against a basket of six major currencies.

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

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

US Dollar: Today's Currency Performance

Today's percentage moves in the US Dollar (USD) against the major currencies listed are shown below. The Swiss Franc was the currency against which the US Dollar performed best.

	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 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).