In European trade on Tuesday, the euro fell against a group of significant competitors, retreating from two-week highs versus the dollar due to profit-taking ahead of significant inflation data for the eurozone.
The European Central Bank is expected to begin lowering interest rates in June, adding pressure to the currency as inflationary pressures begin to lessen.
Amidst worries over the probable widening interest rate differential between the US and the euro zone in the summer, the euro is headed for its fourth straight monthly loss.
USD/EUR
After increasing 0.3% on Monday to resume advances and get closer to a two-week high at $1.0753, EUR/USD dipped 0.3% to $1.0690, with a session high at $1.0730.
The prior advances were supported by a growing willingness to take risks after significant earnings reports from large European companies.
Inflation in Europe
Data on consumer prices in Germany and Spain for April were lower than anticipated, suggesting an easing of inflationary pressures.
Rates in Europe
The probability of an interest rate cut in June increased in response to such data and pessimistic statements made by European Central Bank representatives.
Data on Inflation
As of right now, investors are awaiting statistics on April's overall eurozone inflation, which is predicted to rise by 2.4%.
Monthly Trades
With a 0.9% decline versus the dollar so far in April, the euro is headed for its fourth consecutive monthly loss.
Interest Rate Disparity
The interest rate differential between the US and the eurozone is currently 100 basis points, but it is predicted to move to 125 basis points in June in favour of the US.
