USD traded flat against most of its major rivals in the European session on Monday, following a jump on Friday, when a better-than-anticipated U.S. employment report for July boosted expectations that the Federal Reserve might start paring back its extraordinary stimulus sooner rather than later.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged down 0.01% to 92.79.

The Friday jobs report showed the nonfarm payrolls growing by 943,000 in July (versus economists’ forecast of 870,000), the unemployment rate declining to 5.4% (versus economists’ forecast of 5.6%) from 5.9% in June, and average hourly earnings rising by 0.4% m/m and 4.0% y/y (versus economists’ forecasts of 0.3% m/m and 3.8% y/y).

It is considered that the July jobs statistics, which pointed to a broad labor-market improvement, are removing the key formal obstacle for the U.S. central bank to take a decision to taper its asset purchases soon. Expectations have increased that the first cuts in the Fed’s bond purchases could come as early as September. 

Market participants are now awaiting the U.S. inflation data, set to be released on Wednesday, hoping to get further clues of when the Fed might start tapering.