The euro remained under pressure against a basket of major currencies during European trading on Wednesday, extending losses for a second consecutive session against the US dollar as the greenback continued to benefit from rising US Treasury yields ahead of a closely watched speech by Federal Reserve Chair Kevin Warsh.

Investors are also awaiting key eurozone inflation data later today, along with remarks from European Central Bank President Christine Lagarde at the ECBs annual Sintra Forum in Portugal, as markets look for fresh clues on the outlook for European interest rates.

The Price

The euro fell around 0.2% against the US dollar to $1.1402, down from an opening level of $1.1421. The session high was recorded at $1.1423.

The single currency closed Tuesday down less than 0.1% against the dollar, marking its first daily decline in four sessions, pressured by rising yields on US 10-year Treasury notes.

US Dollar

The US Dollar Index gained 0.2% on Wednesday, extending its advance for a second straight session and reflecting continued strength in the greenback against a basket of global currencies.

The dollar has received support from the recent rise in long-term US Treasury yields, particularly after positive US labor market data reinforced expectations that the Federal Reserve could raise interest rates at least once more this year.

Global markets are now closely watching comments from Federal Reserve Chair Kevin Warsh later today at the European Central Bank Forum in Sintra, Portugal, for further guidance on the outlook for US monetary policy.

European interest rates

Reports suggest the European Central Bank is considering pausing its policy normalization process in July if energy prices remain near current levels.

Money markets continue to price roughly a 30% probability of a 25-basis-point ECB rate hike in July.

Eurozone inflation

To reassess expectations for additional ECB tightening this year, investors are awaiting the release of June inflation data for the eurozone later today.

The figures will provide an updated picture of inflationary pressures facing policymakers at the European Central Bank.

The eurozone annual Consumer Price Index is due at 09:00 GMT. Market forecasts point to annual inflation easing to 3.0% in June from 3.2% in May, while core inflation is expected to slow to 2.5% from 2.6% previously.

Christine Lagarde

At 13:00 GMT, ECB President Christine Lagarde is scheduled to deliver an important speech at the European Central Bank Forum on Central Banking in Sintra, Portugal.

Markets will be looking for additional insights into inflation trends across the eurozone and the ECBs view on the future path of interest rates this year.

Outlook for the euro

At Economies.com, we believe that if inflation data comes in softer than expected and Christine Lagarde delivers less hawkish remarks, expectations for another ECB rate hike this year could weaken further, potentially leading to additional losses for the euro against a basket of global currencies.