The euro was relatively firm against most major currencies on Monday as caution could dominate ahead of a busy week that could reshape expectations for monetary policy in both the euro area and the United States.
Attention is centred on the ECB’s forum in Sintra, where policymakers could provide further insight into the outlook for inflation and interest rates.
Market participants will closely follow remarks from ECB President Christine Lagarde and other members, whose comments could influence bond and currency markets.
In addition, Wednesday’s euro area inflation report could become one of the week’s main catalysts for the single currency.
Both headline and core inflation are forecast to remain above the European Central Bank’s 2% target. Any surprise in inflation figures could influence euro area bond yields and the euro. Economic data released today also painted a broadly constructive picture for the single currency.
The euro area’s Economic Sentiment Indicator rose to its highest level in three months, reflecting stronger confidence across most sectors of the economy, although employment expectations weakened.
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