Peter Nurse

Investing.com: The U.S. Dollar edged lower Monday morning in European trading, as activity was limited before the U.S. release of important consumer inflation data and a significant European Central Bank meeting.

At 3:00 AM ET (0700 GMT),, which compares the greenback to a basket six currencies, closed 0.1% lower at 102.025.

The index had gained around 0.5% last week after Friday’s showed that employers added 390,000 jobs in May, more than expected, which added to expectations that the U.S. Federal Reserve will remain forceful in tackling inflation.

This week, the focus is on May’s release which will take place on Friday.

High inflation levels would increase expectations of U.S. Federal Reserve aggressive tightening and could end speculation last month that Fed might not raise interest rates during its September meeting.

That said, core inflation, which excludes the volatile energy and fuel prices and is the Fed’s preferred gauge, is expected to come in at , a drop from 6.2% the previous month. This would be the third consecutive month of declines, and could indicate that core inflation has peaked.

The upcoming meeting of the on Thursday is also worth noting. This is due to set the stage for an interest-rate hike at the July meeting. 

“The pressure for the ECB to act has increased considerably, but the central bank’s earlier guidance rules out hiking rates at the meeting [this week],” said analysts at Nordea, in a note. “Along with updated inflation forecasts, the ECB’s signals will all but guarantee a rate hike in July.”

While the stock market rose 0.1% to 1.0726, it rose 0.3% to 1.2528 and fell 0.2% at 130.54, this is not too far from its 20-year peak, 131.34.

The risk-sensitive edged lower to 0.7204 ahead of Tuesday’s meeting of the , which is expected to result in a 25 basis point rate hike as the central bank tightens policy to combat inflation.

fell 0.1% to 6.6541 after China’s rose to 41.4 in May from 36.2 in April, suggesting a slow recovery for the second-largest economy in the world as the country eases its COVID-19 curbs in cities such as Shanghai.