Euro fell in European trade against a basket of major rivals, extending losses for the second straight session against the dollar, and almost hitting a seven-week trough amid concerns about the widening US-Europe interest rate gap.
There are now strong odds for the ECB to cut interest rates next April, as investors now await growth data for Europe for the fourth quarter of last year.
EUR/USD
EUR/USD fell 0.2% to 1.0812, with a session-high at 1.0842, after losing 0.2% yesterday, resuming losses and touching a seven-week low at 1.0796.
Interest Rate Gap
The current US-Euro zone interest rate gap stands at 100 basis points, the lowest since May 2022, and was expected to shrink to 75 basis points in March, however as the odds of an early US interest rate cut faded, the gap could actually widen to 125 basis points.
European Growth Data
Later today, important euro zone GDP data will be released for the fourth quarter of last year, which could boost the odds for an early ECB rate cut in April.
Euro zone GDP is expected to have shrunk 0.1% in the fourth quarter, after a similar rate of shrinkage in the third quarter.
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