Euro fell in European trade on Wednesday, and sharpened its decline for the third straight session against the US dollar, trading below $1.08 for the first time in two and a half months after bearish remarks from ECB President Lagarde.

The remarks boosted the odds of a 0.25% ECB interest rate cut in December.

The Price

The EUR/USD pair fell 0.2% today to $1.0779, the lowest since August 1, with a session-high at $1.0806.

The euro fell 0.2% on Tuesday against the dollar, as US treasury yields rallied and bolstered the greenback against main rivals.

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.