EUR/USD Steady Ahead of US Inflation Data, ECB Rate Decision

The EUR/USD pair has been trading steadily above 1.1600 during early European hours on Tuesday, with traders preferring to wait for key US inflation data and the European Central Bank's interest rate decision later this week.

Last week's jobs report showed a stronger-than-expected US economy, beating forecasts of 56,000 new jobs in August with an actual gain of 162,000. The Unemployment Rate remained steady at 4.1%, leading to a nearly 60% chance of a Federal Reserve rate hike this month.

The upcoming US inflation data and the ECB's interest rate decision will provide crucial clues on the US interest rate path. Economists expect August's inflation report to show a slight monthly acceleration, driven by global energy pressures, which could lift the Greenback and create a headwind for the EUR/USD pair.

On the Eurozone front, the ECB is anticipated to hike its benchmark rates for the second time this year when it meets on Thursday. Andrew Kenningham, chief Europe economist at Capital Economics, believes 'the ECB governing council looks certain to raise its deposit rate from 2.25 percent to 2.5 percent.'

Deutsche Bank's European economists also expect a 25bp rate increase, taking the deposit rate to 2.50%, with investors closely monitoring any guidance regarding the likelihood of further tightening.