EUR/USD faces pressure near 1.0800 ahead of data-packed week

• EUR/USD drops after a short-lived pullback from 1.0800 ahead of a data-packed US economic calendar.
• The USD Index rises as market sentiment turns downbeat ahead of the US opening after an extended weekend.
• Eurozone preliminary inflation data will guide market expectations for the ECB rate cuts in June.

The EUR/USD pair falls after a pullback move to near the round-level resistance of 1.0800 in the late London session. The major currency pair faces pressure as investors turn cautious ahead of a data-packed week.

The market sentiment appears to be risk-off as risk-sensitive currencies are down. S&P 500 futures have surrendered almost entire gains posted in the European session ahead of opening after a long weekend fur to Good Friday. The US Dollar Index (DXY) advances to 104.65 amid uncertainty ahead of the crucial United States Nonfarm Payrolls (NFP) report for March, scheduled for Friday.

Before the US NFP, investors will focus on the US Manufacturing PMI report for March, which will be published at 14:00 GMT. The factory data is estimated to have increased to 48.4 from 47.8 in February, but will remain below the 50.0 threshold.

The US Dollar rises even though market expectations for the Federal Reserve (Fed) pivoting to rate cuts from the June policy meeting have increased. According to the CME FedWatch tool, traders are pricing in a 65% chance that the Fed will trim interest rates in June.

The likelihood of a rate cut has increased after US core Personal Consumption Expenditure Inflation (PCE) data for February softened as expected. The monthly and annual core PCE inflation grew by 0.3% and 2.8%, respectively. Also, Fed Chair Jerome Powell said after the release of the US core PCE report that the latest US inflation data was "along the lines of what we would like to see.”

On the Eurozone front, investors await the preliminary inflation data for March, which will be released on Wednesday. The annual core inflation is expected to have decelerated to 3.0% from 3.1% in February. The annual Harmonized Index of Consumer Prices (HICP) is forecasted to have risen at a steady pace of 2.6%. Easing price pressures would accelerate investors’ prospects for the European Central Bank (ECB), kickstarting the rate-cut cycle from the June meeting.