Monday saw EUR/USD fluctuate erratically, settling near 1.0720 after roiling in a narrow but disproportionate range as markets await the US Federal Reserve (Fed) meeting on Wednesday. The prevailing expectation among investors is that US interest rates will remain unchanged this week. However, traders will be on the lookout for an increase in Fed guidance regarding the potential timing of rate cuts. CME's FedWatch Tool indicates that at the time of writing, rate markets have priced in a 58% chance of a first rate reduction occurring in September.

Inflation according to the German Consumer Price Index (CPI) increased to 0.5% MoM in April, surpassing the expected 0.6% but remaining at 0.5% from the previous month. Inflation as measured by the Harmonized Index of Consumer Prices (HICP) for Germany increased marginally from the target of 2.3% to 2.4% year-over-year. The markets will be awaiting Tuesday's HICP inflation report for the pan-Euro area, which for the year ended April is anticipated to remain unchanged at 2.4%.

During Tuesday's European market session, European Gross Domestic Product (GDP) data is also anticipated to be released. Preliminary estimates indicate a modest 0.1% increase in the first quarter, in contrast to the stagnant 0.0% in the previous quarter.

The most significant events of the week will consist of the Federal Reserve's most recent rate decision on Wednesday, and NFP labor data on Friday, which is anticipated to reveal a modest deceleration from the 12-month high of 303k in the previous month. It is expected that Friday's US NFP will decline to 243k net additional jobs.