Euro hovers near two-month trough ahead of European inflation data

Euro fell in European trade on Thursday against major rivals, extending losses for the second day against dollar and almost hitting two-month trough, amid growing doubts about European interest rate hikes later this month. 

Such doubts grew after data showed European consumer prices slowed down more than expected in May, reducing inflationary pressures on ECB policymakers. 

To reappraise such measures, investors await inflation data for the full euro zone later today. 

EUR/USD fell over 0.2% to 1.0665, with a session-high at 1.0697, after losing 0.4% against dollar yesterday, the sixth loss in the last seven days, plumbing two-month lows at 1.0635 following German inflation data. 

Euro fell 3% in May against dollar, the first monthly loss in three months, and the largest such monthly loss since April 2022. 

Such heavy monthly losses are due to growing fears about a widening policy gap between Europe and the US. 

European Inflation Data

Inflation data for major European economies, including Germany, Spain, and France, showed consumer prices slowed down more than expected last month. 

Now investors await consumer prices data for the whole euro zone, expected up 6.3% in May, slowing down from 7% in April. 

The Dollar

The dollar index rose over 0.2%, maintaining gains for the second session and almost  hitting 11-week high at 104.69 against a basket of major rivals.

US House of Representatives voted in favor of raising the US debt ceiling level from the current $31.4 trillion level, with the law now sent to the Senate for final approval. 

Investors also await a batch of important US data later today, including private sector employment data, and unemployment claims data.