Euro rose in European trade on Monday against a basket of major rivals, resuming gains against the dollar and almost touching two-week highs ahead of important European inflation data this week.

Even as the euro gains ground today, overall outlook points to weakness in upcoming days, especially if inflation data boosted the case for ECB interest rate cuts in June and July.

The Price

EUR/USD rose 0.4% to $1.0734, with a session-low at $1.0690, after losing 0.4% on Friday away from a two-week high at $1.0753.

The common currency lost ground after bullish US consumer spending data.

Inflation Data

Later today, several European countries, including Germany, will report inflation data, while full eurozone data will be released tomorrow.

If inflation continues to dampen, itll likely pave the way for interest rate cuts in June and July.

Interest Rate Gap

The current US-Europe interest rate gap stands at 100 basis points, the lowest such gap since May 2022, and is expected to widen to 125 basis points in favor of the US in June.

Such prospects of the interest rate gap heave more pressure on the common currency, especially against the dollar.