The euro fell in the European market on Monday against a basket of global currencies, continuing its losses for the fourth day in a row against the US dollar, on the verge of touching the lowest level in two weeks, due to the high probability of early cuts in European interest rates, in light of the decline in inflationary pressures in Europe.

In order to re-evaluate these possibilities, investors will await, later today, comments by European Central Bank President Christine Lagarde about the future of monetary policy and interest rates in the euro zone.

Euro exchange rate today

The euro fell against the dollar by 0.2% to $1.0853, from the opening price of $1.0875, and recorded the highest level today at $1.0895.

On Friday, the euro lost 0.1% against the dollar, the third daily loss in a row, and recorded its lowest level in two weeks at $1.0829, under the influence of consumer price data in Europe.

The euro fell by 0.5% last week against the dollar, the first weekly loss in the last three weeks, as part of correction and profit-taking operations after recording earlier in the week’s trading the highest level in three months at $1.1017.

Inflation in Europe

The overall consumer price index in Europe recorded the lowest pace of increase in 28 months last November at 2.4%, approaching a medium-term target of 2%, sharply reducing inflationary pressures on monetary policy makers at the European Central Bank.

This strongly strengthened the hypothesis that the cycle of raising European interest rates would end at the current level of 4.5%, which is the highest level in 22 years, and increased the possibility of early cuts next year.

Goldman Sachs (NYSE:GS) said on Friday that it expects the European Central Bank to implement its first interest rate cut in the second quarter of 2024, compared to a previous forecast of a cut in the third quarter.

Christine Lagarde

In order to re-evaluate the existing possibilities about the future of European interest rates, investors are awaiting a speech by European Central Bank President Christine Lagarde at an event in the French capital, Paris, at 14:00 GMT.

Commonwealth Bank of Australia economist Carol Kong said: Lagarde will certainly welcome the November CPI report in the euro zone last week.

But I doubt she would consider the idea of cutting interest rates from the European Central Bank, as the labor market in the euro zone is still tight, Kong added.