EUR/USD at Crossroads Ahead of US CPI Release

The EUR/USD pair is at a crossroads as traders await the release of the US Consumer Price Index (CPI) for their next major move. The US dollar experienced a significant spike on Friday after the August non-farm payroll report showed job growth almost tripling the consensus estimate of 56,000.

However, this upward momentum was short-lived as most of the NFP-driven moves were faded out thereafter. This was due to market focus shifting from the NFP report to the CPI data, which is currently at the forefront of attention for traders.

Fed's Waller mentioned just a day before the NFP report that he would support keeping interest rates unchanged at the upcoming FOMC meeting, but a hot CPI reading would make him consider a rate hike. This week is all about the US CPI data, with the release set to take place on Friday.

A soft or in-line CPI reading will likely weaken the dollar as Fed's Waller mentioned that he won't consider a rate hike unless we get a hot CPI. Conversely, an upside surprise in core monthly inflation data will likely trigger another rally on a hawkish repricing.