German ZEW Economic Sentiment, U.S. Core PPI, FOMC Member Bostic Speaks

The EUR/USD currency pair traded in positive territory on Monday ending the session 0.21% higher. The pair has posted modest gains as the US Dollar (USD) consolidates. Market participants are now closely watching the upcoming release of the US Producer Price Index (PPI), which is expected later today.

Investors have already factored in the possibility of at least a 25 basis point (bps) rate cut by the Federal Reserve (Fed) in September, with a strong likelihood that rates could be reduced by a full percentage point by the end of the year.

Meanwhile, in Europe, the German ZEW Economic Sentiment Index for August is projected to decline to 31.8, down from 41.8 in July. The current situation assessment is also expected to worsen, with a forecasted drop to -75.0 in August from -68.9 previously.

Gold prices climbed more than 1% on Monday, reaching their highest level since August 2. This surge was driven by safe-haven inflows as traders await key U.S. inflation data later this week, which could provide further insights into the Federal Reserve's potential interest rate cuts.

Israeli forces continued their operations near the southern Gaza city of Khan Younis on Monday, amid international efforts to broker a ceasefire and prevent a broader regional conflict involving Iran and its allies.

At the same time, Ukrainian forces launched a surprise attack across the Russian border last Tuesday, penetrating parts of Russia's Kursk region, exposing weaknesses in Russian border defenses.

Investors are also closely monitoring the upcoming U.S. producer price data on Tuesday and consumer price data on Wednesday for more clarity on inflation trends.

Oil prices surged more than 3% on Monday, marking the fifth consecutive session of gains, as the U.S. Defense Department announced it would deploy a guided missile submarine to the Middle East, as the region prepares for possible escalations involving Israel, Iran, and their allies.

Both Iran and Hezbollah have vowed to retaliate following the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr. An attack could escalate the Middle Eastern conflict, potentially disrupting global crude supplies and driving up prices.

Investors are now looking ahead to U.S. consumer price index data for July, due on Wednesday, which is expected to show a month-on-month inflation increase to 0.2%, following a -0.1% reading in June.

The US 500 and US Tech 100 managed to post a slight gain on Monday as investors turned their attention to key inflation data expected later this week while US 30 ended the session with minor losses.

This week, the spotlight is on the consumer price index (CPI) inflation data set to be released on Wednesday. Investors are looking to this report for further insights into the state of the economy and the trajectory of inflation. The Federal Reserve is widely expected to begin cutting rates in September, as evidence mounts of a slowing U.S. economy. However, there is still debate among investors about whether the central bank will opt for a 25 basis point or 50 basis point rate cut.

While earnings season is winding down, a few key reports are still on the horizon. Home Depot and Cisco Systems are among the companies set to report their quarterly earnings in the coming days.