Euro backs off three-month peak on profit-taking

Euro declined in European trade on Thursday against a basket of major rivals, extending losses for the second day against the dollar and backing off three-month high on active profit-taking.

Weak euro zone data hurt the chances of another European Central Bank interest rate hike, with investors now focusing on the likely date of a rate cut next year to boost the economy. 

EUR/USD 

EUR/USD fell 0.15% to 1.0830, with a session-high at 1.0855, after losing 0.3% on Wednesday, the first loss in four days on profit-taking away from a three month high at 1.0887. 

Euro marked its biggest profit against the dollar in a year on Tuesday with a 1.7% surge, following weak US inflation data which indicated the Federal Reserve has finished with the current cycle of policy tightening.

Weak Data

Weak Euro zone data showed industrial production fell 1.1% in September, passing estimates of a 0.9% drop, after rising 0.6% in August. 

It's another sign of weakness in the euro zone economy, indicating the ECB will wrap up its policy tightening measures. 

Interest Rate Gap

As the ECB and the Fed are both expected to hold interest rates flat in December, the current interest rate gap between both regions will remain flat. 

Now markets are stating to speculate on the likely timing of interest rate cuts by the two central banks.