The euro edged lower in European trading on Thursday against a basket of global currencies, extending its losses for the fourth consecutive session versus the US dollar, amid continued demand for the greenback as the preferred investment option, especially after US inflation data strengthened expectations for Federal Reserve rate hikes this year.

This comes as US President Donald Trump and Chinese leader Xi Jinping begin their summit in the first official visit by a US president to China in nearly a decade, with markets closely watching discussions on strengthening trade relations between the worlds two largest economies, alongside complex geopolitical issues, most notably developments in the Iran war and the future of navigation through the Strait of Hormuz and their impact on global energy markets.

Price Overview

Euro exchange rate today: The euro fell less than 0.1% against the dollar to (1.1706$), from todays opening level at (1.1711$), and recorded a session high at (1.1719$).

The euro ended Wednesdays trading down 0.25% against the dollar, marking its third consecutive daily loss, due to stalled US-Iran negotiations.

US Dollar

The dollar index rose 0.1% on Thursday, maintaining gains for the fourth straight session and reflecting continued strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released this week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices recorded their strongest increase in four years, highlighting renewed inflationary pressures facing Federal Reserve policymakers.

According to the CME Groups FedWatch tool, markets are currently pricing in a 31.8% probability of a Federal Reserve rate hike in December, up from just over 16% a week ago.

Trump-Xi Meeting

Global attention is focused on Beijing, where the historic meeting between US President Donald Trump and Chinese President Xi Jinping is taking place, amid Washingtons efforts to secure economic gains and preserve the fragile trade truce between the worlds two largest economies, alongside discussions on complex geopolitical issues, most notably the US-Israeli war against Iran and its regional and international implications.

Trump is expected to seek Chinas assistance in pressuring Iran toward a peace agreement in the Middle East, though analysts believe he is unlikely to receive the support he wants.

European Interest Rates

With global oil prices rising this week, money markets increased pricing for a 25 basis point European Central Bank rate hike at the June meeting from 45% to 50%.

To further reprice those expectations, investors are awaiting additional economic data from the eurozone on inflation, unemployment, and wages.