Here is what you need to know on Monday, May 27:

The action in financial markets turns subdued at the beginning of the week. The European economic docket will feature IFO sentiment data from Germany and the US markets will remain closed in observance of the Memorial Day holiday. Later in the week, comments from central bank officials, inflation data from Germany, the Euro area and the US will be watched closely by market participants.

The US Dollar (USD) Index snapped a four-day winning streak and closed in negative territory on Friday but managed to register modest gains for the week. The USD Index fluctuates in a narrow channel below 105.00 in the European morning on Monday. Supported by the upbeat data releases from the US, the benchmark 10-year yield rose over 1% in the previous week. 

USD/JPY edged higher ahead of the weekend and reached its strongest level since early May above 157.00 on Friday. The pair struggles to gather bullish momentum and trades slightly below 157.00 early Monday. Bank of Japan (BoJ) Governor Kazuo Ueda said on Monday that they have made progress in moving away from zero and lifting inflation expectations but added that they now must re-anchor them at the 2% target. Additionally, BoJ Director-<wbr>General Of the Monetary Affairs Department Kazuhiro Masaki said that the changes in wages in real terms will move to positive territory on a year-on-year basis, adding that they need to keep an eye on energy prices and forex moves.

Japanese Yen stays calm amid softer US Dollar, thin trading.

Despite the broad-based USD strength last week, GBP/USD managed to register marginal gains for the week, supported by the stronger-than-forecast Consumer Price Index (CPI) data from the UK. The pair stays in a consolidation phase and trades at around 1.2750 in the European morning. UK markets will remain closed in observance of Spring Bank Holiday.

EUR/USD gained traction on Friday and erased a large portion of its weekly losses. The pair stays relatively quiet and moves up and down in a narrow band at around 1.0850.

Gold suffered heavy losses last week and dropped to its weakest level in two weeks below $2,330 on Friday. XAU/USD edges slightly higher and holds at around $2,340 to start the new week.