US Dollar Strength, Rising Oil Prices and Key Inflation Data in Focus.

USD – The dollar remains strong, supported by high oil prices and Fed rate expectations.

EUR – The euro remains under pressure from French fiscal concerns and political uncertainty.

GBP – Sterling has gained against the dollar and euro, with UK GDP data in focus.

USD: The dollar heads into the week in a strong position, supported by oil prices above $100 and expectations of further Federal Reserve rate hikes. President Trump has attempted to broker an energy ceasefire between Russia and Ukraine amid political pressure from high fuel prices, although progress has so far been limited. Meanwhile, a Houthi missile attack on Saudi Arabia threatens to increase tensions in the Middle East. Wednesday’s US CPI inflation report for September is the week’s main event, with headline inflation expected to rise from 3.4% to 3.6%. US markets are closed for a public holiday today, although Fed official Hammack is scheduled to speak.

EUR: The euro is consolidating around current levels as investors look ahead to France’s budget process in the coming weeks. Concerns surrounding French public finances and wider political uncertainty remain key risks for the single currency. With the eurozone economic calendar relatively quiet until Friday’s final revisions to September CPI inflation, sentiment and central bank commentary are likely to influence trading. The euro’s near-term direction will also depend on movements in oil prices and the strength of the US dollar.

GBP: Sterling is trading more firmly against the euro following a rally late on Friday and has also edged higher against the dollar since Thursday. This partly reflects growing expectations that the Federal Reserve will not cut interest rates this month. Bank of England officials Breeden and Mann are due to speak today, with investors looking for further clues on the outlook for UK interest rates. Thursday’s GDP report for August will be the key domestic release, with growth expected to fall from 0.4% in July to a 0.1% contraction. A weaker reading could put pressure on sterling, while stronger data may help support the pound.