The euro rose in European trading on Monday against a basket of major currencies, extending gains for the fourth consecutive session against the US dollar, supported by weakness in the greenback ahead of an expected Federal Reserve rate cut later this week.

With renewed inflationary pressures across the eurozone, expectations for a European Central Bank (ECB) rate cut during this weeks meeting have faded. The meetings details are expected to offer clearer guidance on the path of European interest rates for the rest of this year and into next.

Price Overview

EUR/USD rose about 0.2% to $1.1648, up from an opening level of $1.1626, after touching an intraday low of $1.1620.

The euro closed Fridays session up around 0.1% against the dollar its third straight daily gain recovering further from a two-week low of $1.1577.

However, the single currency lost 0.25% last week, marking its second weekly decline in the past three weeks as investors favored the US dollar as a safe alternative asset.

US Dollar

The dollar index fell 0.2% on Monday, retreating from a two-week high and reflecting lower demand for the US currency against a basket of global peers.

Beyond profit-taking, the dollars pullback comes ahead of an expected 25-basis-point rate cut by the Federal Reserve this week which would mark the second consecutive reduction in US interest rates.

European Central Bank

The ECB will hold its policy meeting on Wednesday and Thursday to assess appropriate monetary settings in light of recent eurozone economic developments.

The bank is widely expected to keep interest rates unchanged at 2.15%, the lowest level since October 2022, for the third consecutive meeting.

Markets are awaiting further signals about when the ECB may resume its easing cycle and begin cutting rates before the end of the year.