The euro declined in European trading on Monday against a basket of global currencies, posting its first loss in three days versus the US dollar, and pulling back from a two-week high, due to correction and profit-taking activity, in addition to attempts by the US currency to recover ahead of key US economic data releases.

Following the European Central Bank’s first monetary policy meeting of this year, expectations for a European rate cut in March have eased, despite the recent slowdown in inflationary pressures. To reprice those expectations, traders are awaiting further economic data from the euro area.

Price overview

• Euro exchange rate today: The euro fell against the US dollar by 0.15% to $1.1897, from today’s opening level at $1.1914, and recorded a session high at $1.1917.

• The euro ended Monday’s session up 0.85% against the dollar, marking its second consecutive daily gain, and recorded a two-week high at $1.1927, due to mounting negative pressure on the US currency.

The US dollar

The US Dollar Index rose by more than 0.1% on Tuesday, as part of recovery attempts from a two-week low, reflecting a rebound in the US currency against a basket of major and minor currencies.

Aside from buying from low levels, the dollar’s rebound comes ahead of the release of key US economic data on monthly retail sales, which will provide strong evidence about the pace of US economic growth in the first quarter of this year.

European interest rates

• The European Central Bank kept its main interest rates unchanged last week at 2.15%, the lowest level since October 2022, marking the fifth consecutive meeting without a change.

• ECB President Christine Lagarde said the bank is not committed to a pre-set path for rate cuts, noting that the March decision will depend entirely on incoming data in the coming weeks.

• Lagarde confirmed that the ECB is closely monitoring the euro exchange rate, considering that the current strength of the single currency helps curb imported inflation and may speed progress toward targets without the need for further tightening.

• After the meeting, money market pricing for a 25 basis point ECB rate cut in March declined from 50% to 30%.

• To further reprice these expectations, investors are waiting for more euro area data on inflation, unemployment, and wages.

The Australian dollar declined in Asian trading on Tuesday against a basket of major and minor currencies, pulling back from its highest level in three years versus the US dollar, due to correction and profit-taking activity, in addition to attempts by the US currency to recover ahead of key US economic data releases.

Following the latest meeting of the Reserve Bank of Australia, expectations have increased that the bank could raise Australian interest rates in May. To reprice those expectations, traders are awaiting further economic data from Australia.

Price overview

• Australian dollar exchange rate today: The Australian dollar fell against the US dollar by 0.3% to 0.7072, from today’s opening level at 0.7094, and recorded a session high at 0.7095.

• The Australian dollar ended Monday’s session up 1.15% against the US dollar, marking its second consecutive daily gain, and recorded a three-year high at 70.99 cents, amid renewed selling pressure on the US currency.

The US dollar

The US Dollar Index rose by more than 0.1% on Tuesday, as part of a recovery attempt from a two-week low, reflecting a rebound in the US currency against a basket of major and minor currencies.

Aside from buying from low levels, the dollar’s rebound comes ahead of the release of key US economic data on monthly retail sales, which will provide strong evidence about the pace of US economic growth in the first quarter of this year.

Australian interest rates

• Earlier this month, the Reserve Bank of Australia’s monetary policy committee decided to raise the benchmark interest rate by 25 basis points to 3.85%, marking the first Australian rate hike since November 2023, after keeping rates unchanged over the previous three meetings.

• RBA Governor Michele Bullock said that inflation remains too high and cannot be allowed to get out of control, adding that there are concerns inflation could remain elevated.

• After the February meeting, pricing for a 25 basis point rate hike in March remained below 50%.

• Pricing for a 25 basis point rate hike in May rose to above 80%.

• To further reprice these expectations, investors are waiting for additional data on inflation, unemployment, and wages in Australia.

US stock indices mostly rose during Monday trading, extending their strong gains with support from the technology sector, while the Dow Jones index held above the 50,000-point level, which it closed above for the first time in its history last Friday.

In the current week, the US January jobs report is due for release after being postponed from last Friday, in addition to upcoming consumer price data.

Traders are also maintaining bets that the Federal Reserve will move toward monetary easing later this year.

According to the CME Group FedWatch tool, the probability of a 25-basis-point rate cut at the Federal Reserve’s next meeting on March 18 stands at 15.8%, down from 18.4% on Friday.

In trading, the Dow Jones Industrial Average slipped by less than 0.1% (about 17 points) to 50,098 as of 17:33 GMT. The S&P 500 index rose 0.6% (about 40 points) to 6,972, while the Nasdaq Composite climbed 1.1% (about 245 points) to 23,276.

Bitcoin traded above the $70,000 level on Monday, holding steady after a sharp rebound late last week from lows near $60,000, as investors reassessed risk appetite following a wave of heavy liquidations and shifted their focus to key US economic data due later in the week.

The world’s largest cryptocurrency was up 1.5% at $70,402.5 as of 01:25 ET (06:25 GMT), moving further away from its 16-month low near $60,187.0 recorded earlier in the week.

The token had jumped back above $70,000 on Friday, gaining more than 12% in a single session, alongside advances in technology stocks and precious metals, which helped support higher-risk assets more broadly.

The recovery was partly driven by dip-buying after the steep decline, in addition to broader stabilization across global markets.

Last week’s sharp drop in Bitcoin was linked to widespread risk aversion across global markets, as a selloff in US technology shares — particularly AI-related stocks — combined with forced liquidations in crypto futures markets to intensify downside pressure.

Investors also recorded continued outflows from spot Bitcoin exchange-traded funds, along with a reduction in leveraged positions, which were seen as key drivers behind the volatility.

Japan election boosts sentiment

Japanese Prime Minister Sanae Takaichi secured a landslide election victory on Sunday, strengthening her mandate to continue fiscal stimulus and tax-cut policies. The decisive result supported regional equity markets and was associated with a partial return of risk appetite across global assets.

While the yen initially weakened ahead of the election outcome, its later stabilization alongside equity gains helped reinforce improved broader market sentiment.

Investors are now awaiting a batch of key US economic releases later this week, including delayed employment data on Wednesday and the Consumer Price Index report on Friday.

Those figures could influence Federal Reserve rate expectations, as markets price in potential rate cuts later in 2026 if inflation slows and labor market momentum weakens.

Altcoins move in tight ranges

Most altcoins traded in narrow ranges on Monday.

Ethereum, the world’s second-largest cryptocurrency, held steady at $2,076.41, while XRP, the third-largest token, rose 1.1% to $1.43.