The euro deepens its losses to the lowest level in 3 weeks due to the possibility of a European interest rate cut

The euro fell in the European market on Thursday against a basket of global currencies, deepening its losses for the seventh day in a row against the US dollar, recording the lowest level in three weeks, due to the high probability of cutting European interest rates early next year.

This is in light of a series of cautious comments from some European Central Bank officials, which followed inflation data in the euro zone, which last November recorded the lowest pace of increase in 28 months.

Euro exchange rate today

The euro fell against the dollar by 0.1% to $1.0755, the lowest since November 14, from the opening price of $1.0764, and recorded the highest level today at $1.0772.

On Wednesday, the euro lost 0.3% against the dollar, the sixth daily loss in a row, as part of the longest series of daily losses since September, due to the acceleration of the sale of the single European currency.

European comments

The governor of the Central Bank of France and member of the European Central Bank, François Villeroy, told a French newspaper in an interview published on Wednesday: The issue of cutting European interest rates may arise in 2024. Villeroy added: Deflation in the euro zone is happening more quickly than we thought.

European Central Bank Executive Board member Isabel Schnabel said on Tuesday: Further interest rate hikes in the euro zone are somewhat unlikely after November's inflation data.

Schnabel added: The weak data indicate that the European economy may reach its lowest levels, but it is not facing a long-term recession. Schnabel explained: The recent inflation developments in the euro area are encouraging, and the decline in core prices is noticeable.

The European Central Bank will set interest rates on Thursday next week and is certain to leave them at the current historical level of 4.5%, which is the highest level in 22 years.

Traders expect there is around an 85% chance that the ECB will cut interest rates at its March 2024 meeting, with roughly 150 basis point cuts in European interest rates until the end of next year.