The euro fell in European trade on Thursday against a basket of major rivals, expanding the losses for the third straight session against the dollar and plumbing two-week lows amid concerns about a wide US-eurozone interest rate gap.

The European Central Bank is widely expected to cut interest rates in June, while the Federal Reserve is unlikely to change policies this month.

The Price

The EUR/USD price fell 0.35% today to $1.1287, the lowest since April 16, with a session-high at $1.1331.

The pair closed down 0.5% on Wednesday, the second loss in a row as the greenback rebounded strongly.

The euro rallied 4.75% last month against the dollar, marking the third monthly profit in a row, and the largest since late 2022 following huge German stimulus plans, while Trump paused his tariffs on the EU for 90 days.

Interest Rate Gap

The US-eurozone interest rate gap expanded to 210 basis points after the European Central Bank cut rates in April, with the gap potentially expanding in upcoming months.

European Rates

Sources reported that some ECB officials see a high chance of a rate cut in June.

President of the Deutsche Bundesbank Joachim Nagel said that German recession this year cant be ruled out.

European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.

Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary.

Markets are currently pricing in a 60% chance of an ECB interest rate cut in June.

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