Euro fell in European trade on Monday against a basket of major rivals, resuming the losses and trading near 2-⅕ month lows against the US dollar amid negative pressures due to concerns about the US-eurozone interest rate gap.

Recent media reports pointed to a likely fourth eurozone interest rate cut this year in December, unless upcoming data pointed otherwise.

The Price

The EUR/USD pair fell 0.2% today to $1.0846, with a session-high at $1.087.

The pair closed up 0.3% on Friday, marking the first profit in eight sessions and rebounding from 2-⅕ month lows at $1.0811.

The euro lost 0.65% against the US dollar last week, marking the third weekly loss in a row after the European Central Banks policy meeting.

The ECB

The European Central Bank voted to cut interest rates by 25 basis points to 3.40%, the lowest since February 2023, thus matching analysts' expectations.

The ECB said its policy decision is based on inflation forecasts and expected dynamics for the months to come.

Itll continue to rely on data and economic developments to decide on its next policy decisions.

Lagarde

ECB President Christine Lagarde said the decision to cut interest rates for the third time this year came amid a lull in inflationary pressures.

She said that recent eurozone inflation data are matching the ECB expectations, however she warned of a late spike in prices in the final part of the year.

European Rates

Four sources close to the matter told Reuters the ECB is likely to cut interest rates once more in December, unless data decide otherwise.

Following the report, the odds of a 0.25% ECB rate cut in December rose from 70% to 85%.

Interest Rate Gap

The current US-eurozone interest rate gap is standing at 160 basis points in favor of the US, and its the largest such gap since June 2022, in turn putting the euro under constant pressure.