The euro rose in European markets on Thursday against a basket of major global currencies, marking its first gain in six sessions against the US dollar. This comes as part of an attempted rebound from a two-month low, driven by renewed buying interest at lower levels. However, despite todays rise, the euro is on track for its first monthly loss of 2025.

Later today, Germany is set to release key inflation data for July, ahead of the eurozone-wide inflation report due Friday. These figures are expected to offer new clues about the likelihood of a European Central Bank rate cut in September.

Price Overview

EUR/USD today: The euro rose by 0.35% to $1.1443, up from an opening price of $1.1403, with a session low at $1.1402.

On Wednesday, the euro closed down 1.25% against the dollar its fifth straight daily loss hitting a two-month low of $1.1400. This drop followed strong US growth data and a hawkish Federal Reserve meeting.

Monthly Performance

For the month of July, which officially ends with todays price settlement, the euro is down approximately 2.9% against the dollar. This marks its first monthly loss of 2025, and the biggest since December 2024.

The decline is attributed to profit-taking and correction from a four-year high of $1.1830 earlier this month.

Market concerns have grown over a potential eurozone recession due to escalating trade tensions between the EU and the US.

Germany and France have strongly criticized the recently announced EU-US trade agreement.

ECB Policy Outlook

Last week, the European Central Bank kept its key interest rates unchanged at 2.15%, the lowest level since October 2022, after seven consecutive rate cuts.

The ECB has opted for a pause in monetary easing, awaiting more clarity on future US-EU trade relations.

ECB President Christine Lagarde stated after the policy meeting: We are in a wait-and-see position, adding that the eurozone economy has shown resilience despite global uncertainties.

According to Reuters sources, a clear majority within the ECBs governing council favored keeping rates unchanged again in September.

As a result, money market pricing for a 25-basis-point rate cut in September has dropped from 50% to below 30%.

German Inflation Data

To reassess the likelihood of a rate cut, investors are closely watching todays release of Germanys headline inflation data for July, ahead of tomorrows broader eurozone report.

These figures will indicate how much inflationary pressure is weighing on ECB policymakers. Higher-than-expected readings would reduce the probability of a September rate cut and vice versa.

Outlook for the Euro

At Economies.com we expect the following: If inflation data comes in hotter than market expectations, the likelihood of an ECB rate cut in September will diminish, potentially supporting continued recovery in the euros exchange rate in the foreign exchange market.