EUR/USD pares gains made in the last two consecutive weeks around 1.0800 as traders brace for the all-important US Nonfarm Payrolls (NFP) during early Monday. Adding strength to the pullback moves could be the recent fears of escalating pressure on prices and downbeat Eurozone inflation numbers versus firmer prints of the Federal Reserve’s (Fed) favorite inflation gauge.

The recent surprise supply cut from the the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known as OPEC , renew inflation fears and propel the concerns of higher rates, which in turn underpinned the US Dollar’s haven demand.

Adding strength to the US Dollar could be the recently firmer inflation signals as the US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, declined to 4.6% YoY in February from 4.7% expected and prior. On a monthly basis, Core PCE inflation rose 0.3% while easing below the market expectation of 0.4% and a downwardly revised 0.5% previous reading.

On the other hand, Eurozone Harmonised Index of Consumer Prices (HICP), the European Central Bank’s (ECB) preferred version of inflation, eased to 6.5% YoY in March versus February’s 8.5% and 7.1% market forecasts. It’s worth noting, however, that the Core HICP matched 5.7% analysts’ estimations and 5.6% prior. The monthly figures were more interesting as the headline HICP rose by 0.9% in March vs. 0.8% expectations and 0.8% previous while the Core HICP jumped by 1.2% compared to 0.6% expected and 0.8% seen in February.

It should be noted that the latest comments from the European Central Bank (ECB) Officials, namely from Vice-President Luis de Guindos and policymaker Fabio Panetta hint at easing inflation pressure but defend the hawkish monetary policy bias. On the other hand, Fed Chairman Jerome Powell pushed for one more rate hike while Federal Reserve Bank of Boston President Susan Collins highlighted the importance of higher rates to tame inflation during her latest speeches. On the same line, Federal Reserve Bank of New York President John C. Williams said that he expects inflation to decline to around 3-1/4 percent this year, before moving closer to our longer-run goal in the next two years.

Against this backdrop, S&P 500 Futures print mild losses despite upbeat closing of Wall Street whereas yields grind higher after three-day downtrend.

Moving on, US ISM Manufacturing PMI and S&P Global Manufacturing PMI for March can direct intraday moves but major attention should be given to Friday’s US jobs report and headlines suggesting inflation woes.