EURUSD keeps retreating. The current quote is 1.0670.

The currency pair dropped to the lows of five months. The reason is the market fear of the lengthy phase of monetary policy tightening by the US Federal Reserve System.

First, the US presented the labour market report for January, and it turned out strong. It made investors think that the Fed would go on using this means of increasing the interest rate further and thus fighting with inflation.

On Tuesday, a fresh CPI report will be presented. According to average forecasts, the indicator should have dropped to 6.2% from 6.5% y/y. However, month-wise, the indicator might have grown by 0.5% m/m after falling by 0.1% m/m in December. All this makes market players avoid risks. Base inflation might have also sped up to 0.4% from 0.3%.

In other words, the market is focused on tomorrow reports.