- The euro gained ground against the dollar and the yen on Monday, bolstered by expectations that the preliminary euro zone inflation report, due out on Wednesday, would show that consumer prices ticked higher this month.

EUR/USD touched two-week highs of 1.3880 and was last up 0.21% to 1.3862.

The pair was likely to find support at 1.3813, the session low and resistance at 1.3895.

The euro was buoyed up by hopes that an uptick in the region’s inflation rate would ease pressure on the European Central Bank to implement additional monetary policy measures.

In March, the annual rate of inflation in the euro zone slowed to 0.5%, the lowest since November 2009. The ECB targets an inflation rate of close to but just under 2%.The consensus forecast is for the inflation rate to rise to 0.8%.

Last week, ECB President Mario Draghi reiterated warnings that further gains in the euro could trigger additional monetary easing to stop inflation from falling. He also said the ECB could launch a "broad-based" asset purchase program if the medium-term inflation outlook deteriorated.

On Monday, ECB Governing Council member Christian Noyer said that while the strong euro was weighing on consumer prices the euro area was not at risk of falling into deflation.

EUR/JPY was trading at 141.85, up 0.35% from 141.35 on Friday.

Market participants were looking ahead to monetary policy statements by the Bank of Japan and the Federal Reserve later in the week. The BoJ was expected to keep the size of its stimulus program unchanged, while the Fed was expected to stick to its current timetable for tapering its asset purchase program.

Meanwhile, Friday’s U.S. nonfarm payrolls report for April was expected to indicate that the recovery in the labor market is continuing.

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