Euro Holds Steady Ahead of Crucial ECB Decision and US CPI Data

The EUR/USD pair has been trading sideways near 1.1625 amid an extended weekend in the US, ahead of key economic data releases and a crucial policy decision from the European Central Bank (ECB).

Investors are eagerly awaiting the ECB's monetary policy announcement on Thursday, where they expect a 25 basis point rate increase, taking the deposit rate to 2.50%, according to Deutsche Bank.

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

The EUR/USD pair is currently holding above its 20-day Exponential Moving Average (EMA) at 1.1600, with the Relative Strength Index (RSI) around 56 suggesting constructive but not overextended upside momentum.