Ahead of crucial European inflation data this week, the euro strengthened in European trade on Monday against a basket of key competitors, resuming advances against the dollar and nearly reaching two-week highs.
Even though the euro is rising today, the overall picture suggests that it will decline in the following days, particularly if statistics on inflation strengthened the case for ECB interest rate reduction in June and July.
The Cost
After falling 0.4% on Friday from a two-week high of $1.0753, EUR/USD increased 0.4% to $1.0734, with a session low of $1.0690.
The US consumer expenditure report was positive, but the common currency lost ground.
Data on Inflation
Germany is among the European nations that will reveal inflation data later today; the entire eurozone's figures will be made public tomorrow.
Interest rate decreases in June and July are probably in the works if inflation stays low.
Interest Rate Disparity
The difference in interest rates between the US and Europe is currently 100 basis points, the lowest since May 2022. In June, the difference is predicted to grow to 125 basis points in favour of the US.
The common currency is under increased pressure, particularly in relation to the dollar, due to the possibility of the interest rate disparity.
