EUR/USD trades modestly higher on Wednesday as weaker-than-expected US labor market data and easing energy-driven inflation risks temper Federal Reserve (Fed) rate-hike expectations and weigh on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.70. Attention now turns to Friday’s Nonfarm Payrolls (NFP) report for fresh clues about the US labor market. They argue that this divergence on inflation leaves “Fed fund futures more sensitive to inflation than employment data.” Lower Oil prices reduce inflation risks, although US inflation is still running above the Fed’s 2% target.