Euro fell in European trade on Friday against a basket of major rivals, sharpening losses for the second day against the dollar, plumbing six-week lows and on track for the second weekly loss in a row following the European Central Bank's policy meeting, which bolstered the case for an interest rate cut in April.
A string of strong US data conversely hurt the odds of early US interest rate cuts, especially in March and May.
EUR/USD
EUR/USD fell 0.3% to 1.0813, the lowest since December 13, after losing 0.4% on Thursday, the third loss in four days after the ECB's policy meeting, and strong US GDP growth data.
Weekly Trades
Euro is down 0.8% so far this week against the dollar, on track for the second weekly loss in a row amid renewed concerns about the interest rate gap between Europe and the US.
ECB
As expected, the European Central Bank voted to hold interest rates unchanged at 4.5% this week, the highest in 23 years.
The ECB said that current rates will help achieve the 2% inflation target if maintained for an extended duration.
The ECB said that recent data indeed showed that inflation is declining in the medium term.
Lagarde
ECB President Christine Lagarde said it's still too early to talk about interest rate cuts in the euro zone, however she said that risks to growth are trending down.
She asserted the ECB will rely on fresh data to decline the path ahead for policies, adding that a rate cut in the summer is possible.
European Rates
Following Lagarde's remarks, the odds of an April interest rate cut by the ECB rose to 80%.
Rate Gap
The interest rate gap between Europe and the US currently stands at 100 basis points, the lowest such gap since May 2022.
Recent strong US data delayed the timing of the first interest rate cut by the Federal Reserve, which threatens to widen the gap even further.
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