The euro fell in European trade on Wednesday on track for the first loss in three days against the dollar, as recession concerns diminished following an initial US-China trade agreement in China.

The odds of an ECB interest rate cut in July dropped, with the eyes now focused on US inflation data later today to gauge the likelihood of Fed rate cuts in the second half of the year.

The Price

The EUR/USD price fell 0.15% today to $1.1405, with a session-high at $1.1439.

The euro rose 0.1% on Tuesday against the dollar, the second profit in a row.

US Dollar

The dollar index rose 0.1% on Wednesday against a basket of major rivals as US recession fears took a back seat.

Trade Agreement

US and Chinese trade representatives said a trade framework has been reached, with both sides seeking approval from Trump and Xi Jinping to carry on discussions.

This progress comes after an important deal reached in mid May, which stopped the enforcement of most tariffs for 90 days.

The most crucial items of the initial agreement is reducing limits on US chip exports, and Chinas rare-earth minerals and magnet exports.

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.