Euro rose in European trade on Friday against a basket of major rivals, moving in a positive zone for the second day against the dollar and edging away from recent 3-⅕ month lows, following strong German data.

Despite the gains, the euro is still heading for the fourth weekly loss in a row amid concerns about the interest rate gap between Europe and the US following bearish remarks from the European Central Bank President Lagardes about the future of interest rates.

The Price

The EUR/USD pair rose 0.1% today to $1.0837, with a session-low at $1.0813.

The euro closed up 0.4% on Thursday, the first profit in four days away from a 3-⅕ month trough at $1.0761.

Earlier data from the Ifo Institute showed the German business climate index up slightly to 86.5 in October from 85.4, beating estimates of 85.6.

Weekly Trades

The euro is down 0.3% so far this week against the greenback, heading for the fourth weekly loss in a row.

Lagarde

European Central Bank President Christine Lagarde said on Tuesday that eurozone inflation is on its way down, and could reach the 2% target faster than expected.

She said the direction of the monetary policy has become clear, however, future interest rate cuts will depend on future data.

The ECB cut interest rates three times this year, and will likely cut it once more before the year-end.

European Rates

Four sources told Reuters that the ECB will likely cut interest rates once more in December, unless data pointed otherwise.

And after Lagardes latest remarks, the odds of an ECB interest rate cut in December rallied from 85% to 95%.

Interest Rate Gap

The eurozone-US interest rate gap is standing at 160 basis points in favor of the US, the largest since June 2022, which continues to weigh on the common currency.