EUR/USD Trades Sideways Amid ECB Decision Looming

The EUR/USD currency pair is trading steadily near 1.1625 against the US dollar on Monday, amid an extended weekend in the United States due to Labor Day.

This week's key events include the European Central Bank's monetary policy announcement on Thursday and the release of the US Consumer Price Index (CPI) data on Friday.

Deutsche Bank economists expect a 25bp rate increase, taking the deposit rate to 2.50%, and investors will be closely watching any guidance regarding further tightening beyond this week's move.

Strategists at BNY highlight that last week's strong US labour data pushed market-implied odds of a September Fed hike back up to around 60% from 50%, underscoring how much rate expectations remain tethered to the data backdrop.