The euro weakened in European trading on Monday against a basket of global currencies, retreating from a two-week high versus the US dollar as investors engaged in profit-taking and corrective selling, while renewed demand for the greenback as a preferred currency investment also weighed on the single currency.

Softer-than-expected inflation data and less hawkish comments from the President of the European Central Bank have reduced expectations for a European interest rate hike in July, with investors now awaiting additional economic data from across the Eurozone.

The Price

EUR/USD fell 0.1% to $1.1428, down from an opening level of $1.1438, after reaching an intraday high of $1.1441.

The euro ended Friday little changed against the dollar after rising 0.5% in the previous session and touching a two-week high of $1.1473.

The single currency gained around 0.5% against the dollar last week, marking its first weekly advance in three weeks, supported by easing expectations for additional US rate hikes this year.

US dollar

The US Dollar Index rose more than 0.1% on Monday, extending gains for a second consecutive session as the currency continued to recover from a two-week low, reflecting broader strength against a basket of major global currencies.

Several analysts maintained a positive outlook for the US dollar, suggesting it could appreciate by a modest 2%3% during the second half of 2026.

Investors are focusing this week on the minutes of the Federal Reserves June meeting to gain further insight into policymakers interest rate expectations for the remainder of the year.

Later today, the Institute for Supply Management (ISM) will release its June report on US services sector activity, which is expected to provide important clues about the pace of business growth in the second quarter.

European interest rates

ECB President Christine Lagarde said last week in Sintra, Portugal, that risks to inflation and economic growth in the Eurozone have become more balanced compared with a few weeks ago, helped by the recent decline in oil prices.

Official Eurozone inflation data showed a sharper-than-expected slowdown in consumer prices during June, largely due to lower fuel costs following the end of the Iran conflict.

Following those comments and inflation figures, money markets reduced the probability of a 25-basis-point ECB rate hike in July from 30% to just 5%.

Investors are now awaiting further Eurozone data on inflation, unemployment, and wages to reassess the outlook for European monetary policy.