Euro in the spotlight with French, German inflation numbers on the cards

<p>The dollar has made some decent strides this week but faced a bit of a setback overnight when 10-year Treasury yields were rejected at the 4% mark. That is perhaps a sign that the moves this week have been somewhat corrective only and not quite a change up in the trend from over the last two months – at least not yet.</p><p>Still, we are seeing the likes of USD/JPY keep a solid rebound with the pair now even pushing above its 200-day moving average of 143.17. That is a big win for dollar bulls but we'll see if the momentum can be kept up if Treasury yields are somewhat capped for the time being.</p><p>Looking to the European trading session, the euro will come under scrutiny as we have French and German inflation data to work through. Both are expected to reaffirm stickier inflation pressures to wrap up last year and that is likely to keep the ECB on their toes.</p><p>The euro could see a light pop on higher-than-expected numbers but I don't see much hope in expecting a change in the narrative by the ECB based on the data today. Policymakers have reaffirmed a pause and they have said that any talk of rate cuts are still premature for now. And they will continue to stick to that account to start the new year.</p><p>As things stand, the odds of a March rate cut are at ~73%. So, there might be some pushback on that pricing if the inflation numbers today are hotter. But I would expect any significant pop higher in the euro to be faded in the aftermath.</p><p>0745 GMT – France December preliminary CPI figures0815 GMT – Spain December services PMI0845 GMT – Italy December services, composite PMI0850 GMT – France December final services, composite PMI0855 GMT – Germany December final services, composite PMI0900 GMT – Eurozone December final services, composite PMI0930 GMT – UK December final services, composite PMI0930 GMT – UK November mortgage approvals, credit data1230 GMT – US December Challenger job cuts, layoffs1300 GMT – Germany December preliminary CPI figures</p><p>That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.</p>

This article was written by Justin Low at www.forexlive.com.