If today's inflation data comes in higher than expected, the euro could receive support.

Eurozone overall inflation data is expected to show CPI rising 0.1% month-on-month and 2.2% year-on-year in August, but with both French and German harmonized CPI figures coming in above expectations, the regional aggregate is also likely to exceed economists' forecasts.

The European Central Bank will hold its meeting this month, and if new macroeconomic projections show inflation remaining stable but sticky, particularly core prices, the governing council's tone could turn hawkish and further reduce rate cut bets. Eurozone traders currently price in approximately a 30% probability of rate cuts this year.

This could drive EUR/USD toward 1.1829, the strongest level since the ECB began its easing policy in the current cycle, representing more than 1% upside from current levels. However, subsequent movements will depend on the Federal Reserve's next actions.

This week's U.S. non-farm payrolls data is expected to show weakness again, while next week's inflation data is anticipated to rise from 2.7% to 2.9%. At these levels, the Fed would be much more likely to cut rates this month. However, an unexpectedly strong employment report combined with a more pronounced inflation rebound could weaken rate cut bets and push the dollar higher against the euro.