The euro edged higher in European trading on Tuesday against a basket of global currencies, extending its gains for a fourth consecutive session versus the US dollar and moving closer to a two-week high. The single currency continues to benefit from a string of weaker-than-expected US economic data, which has reduced expectations for additional Federal Reserve rate hikes this year.

At the same time, expectations for higher European interest rates have eased significantly following less hawkish comments from European Central Bank President Christine Lagarde and softer-than-expected eurozone inflation data for June.

The Price

EUR/USD today: The euro rose by less than 0.1% to $1.1448 from an opening level of $1.1441, after touching an intraday low of $1.1436.

The euro closed Monday up by less than 0.1% against the dollar, marking its third straight daily gain and remaining close to a two-week high of $1.1473.

The US dollar

The US Dollar Index fell around 0.1% on Tuesday, extending losses for a second consecutive session and moving closer to its lowest levels in two weeks, reflecting broader weakness in the greenback against major and minor currencies.

The decline comes as a series of US economic reports continue to disappoint expectations. The latest data from the Institute for Supply Management showed a sharper-than-expected slowdown in US services sector activity during June.

Those figures have reduced the likelihood of the Federal Reserve delivering another rate hike this year. Investors will now focus on Wednesdays release of the minutes from the first Fed policy meeting chaired by Kevin Warsh for further clues on the outlook for US monetary policy.

European interest rates

ECB President Christine Lagarde said last week during the Sintra conference in Portugal that risks to inflation and economic growth in the eurozone have become more balanced compared with a few weeks ago, helped by the recent decline in oil prices.

Official eurozone inflation data showed a larger-than-expected slowdown in consumer price growth during June, largely due to lower fuel prices following the end of the Iran conflict.

Following those comments and inflation figures, money markets cut expectations for a 25-basis-point ECB rate hike in July from 30% to just 5%.

Investors are now awaiting further eurozone data on inflation, unemployment and wage growth to reassess the outlook for ECB policy.