Euro rose in European trade on Thursday against a basket of major rivals, extending gains for the fourth straight session against the dollar and scaling a two-month highs, while approaching the $1.09 barrier amid a strong risk appetite.

Concerns about a widening US-Europe interest rate gap faded as well amid the increasing odds of two Federal Reserve interest rate cuts this year.

The Price

The EUR/USD pair rose 0.1% to $1.0895, the highest since March 21, with a session-low at $1.0880.

The pair rose 0.6% on Wednesday, the third profit in a row, and the largest since April 3 following US consumer prices data.

European Remarks

The Netherland Central Bank Governor Klaas Knot said that June could be a good opportunity to cut interest rates.

The Belgium Central Bank Governor Pierre Wunsch also said that the first two 0.25% interest rate cuts by the ECB is a done deal.

He added that the first two rate cuts by the ECB would be the easy part, but the pacing of subsequent cuts will be slower compared to the Federal Reserve.

European Rates

The markets are primed for an ECB interest rate cut in June, with the move already priced in.

US Rates

Recent US producer and consumer prices data bolstered the case of two Fed rate cuts in September and November, totaling 50 basis points.

Total cuts could even reach 75 basis points as the Fed itself predicted in 2024, if inflation and the labor markets continued to soften.

Rate Gap

The current Europe-US interest rate gap stands at 100 basis points in favor of the US, and will likely increase to 125 basis points by June, which was already priced in.