The euro fell in European trade on Monday against a basket of major rivals, extending losses for the second straight session against the dollar and backing off a four-year peak on active profit-taking, as haven demand on the dollar mounts due to the Israel-Iran war.

The losses are curbed by the receding odds of an ECB interest rate cut in July as traders await more clues on the path ahead for European interest rates this year.

The Price

The EUR/USD price fell 0.25% today to $1.1523, with a session-high at $1.1560.

The euro closed down 0.25% on Friday against the dollar, marking the first loss in five sessions on profit-taking away from a four-year peak at $1.1631.

The euro rose 1.4% last week against the dollar, marking the second weekly profit in a row as the odds of a European July rate cut tumbled.

The Dollar

The US dollar rose 0.25% on Monday, maintaining the gains for the second session and recovering from a three-year nadir at 97.60 against a basket of major rivals.

Israel and Iran continued their mutual attacks with drones and missiles in a new escalation to tensions, triggering concerns of a wider conflict that could engulf other countries.

Israel continues to target Irans military facilities and infrastructure in Syria and inside Iran, with Iran responding with waves of drone and missile attacks on Israeli cities.

International powers have called for calm and de-escalation, with analysts expecting this exchange to be a new phase of the untraditional conflict between both sides.

European Rates

ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.

According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.

The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues.