The euro rose in European trading on Tuesday against a basket of global currencies, posting its first gain in three days versus the US dollar, as part of a rebound attempt from a two-week low, supported by a pause in the dollars advance in the foreign exchange market ahead of key US labor market data.

Investors are awaiting the release on Wednesday of headline inflation data for the euro area for January, which is expected to provide strong signals about the European Central Banks interest rate path this year.

Price Overview

The euro rose 0.2% against the US dollar to $1.1816, from the days opening level at $1.1791, and recorded a session low at $1.1785.

The euro closed Monday down 0.5% against the dollar, marking a second straight daily loss, and hit a two-week low at $1.1776 after the release of strong US economic data.

US Dollar

The dollar index fell 0.2% on Tuesday, pulling back from a two-week high at 97.73 points, reflecting a pause in the US currencys gains against a basket of major and minor currencies.

Beyond profit-taking sales, the dollar weakened as investors refrained from building new long positions ahead of important US labor market data, which will offer clearer guidance on the Federal Reserves interest rate path this year.

Later today, US job openings data for the end of November will be released, followed on Wednesday by US private payrolls data, Thursdays weekly jobless claims, and Fridays official employment report for December.

European Rates

Money markets are currently pricing the probability of a 25 basis point rate cut by the European Central Bank in February at below 25%.

To reassess those expectations, investors are watching for the euro area headline inflation data for January due on Wednesday.

The first ECB monetary policy meeting of the year begins Wednesday, with decisions due Thursday, and rates are widely expected to remain unchanged for the fifth consecutive meeting.