Euro lost ground in European trade on Thursday on track for the second straight loss against the dollar, plumbing two-month losses, amid concerns about a wider eurozone-US interest rate gap.

The European Central Bank is now widely expected to cut interest rates next week, while the odds of a Federal Reserve interest rate cut in November receded.

Investors are now waiting for important US inflation data later today for September to gather more clues on the path ahead for monetary policies.

The Price

The EUR/USD fell 0.1% today to $1.0928, the lowest since August 13, with a session-high at $1.0946.

The euro fell 0.4% on Wednesday against the dollar as US treasury yields surged.

European Rates

Eurozone inflation slowed down to 3-⅕ year lows in September, as inflationary pressures on ECB policymakers recede.

ECB President Christine Lagarde said last week that recent developments bolster confidence that inflation will return to targets in time, which would reflect on the October 17 policy decision.

Right now, the odds of a 0.25% ECB interest rate cut in October rose from 80% to 95%.

US Policies

The Federal Reserves September meeting minutes showed Fed Chair Jerome Powell faced resistance from some members on cutting rates by 50 basis points, with some preferring a smaller 0.25% cut.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in November stood at 85%, while the odds of no changes stood at 15%.

Rate Gap

The current eurozone-US interest rate gap stands at 135 basis points, and could expand to 160 basis points in favor of the US in October, in turn pressuring the common currency.