Euro continues to recover ahead of ECB meeting minutes

Euro rose on Thursday against a basket of global currencies, continuing its recovery for the second day in a row from a three-week low against US dollar, taking advantage of the accelerated dollar sell-off, following Federal Reserve Chairman Jerome Powell's testimony before the Congress, which has boosted prospects of a cut in US interest rates this year comes ahead of the release of the the latest ECB meeting minutes, which is sure to provide strong evidence on the future of monetary policy in the euro area.

As of 08:15 GMT, EUR/USD rose by more than 0.2% to trade at $1.1275, from the opening price of $1.1250, with the highest at $1.1280 and the lowest at $1.1250.

Euro gained 0.4% against dollar on Wednesday, its first gain in the past four days, recovering from a three-week low of $1.1193 recorded the day before, supported by Jerome Powell's comments at the US Congress.

The dollar index fell more than 0.25% on Thursday, extending losses for the second day in a row, reflecting the continued decline of the US currency against a basket of major and secondary currencies, after the Federal Reserve's Governor semi-annual testimony, which has boosted the possibility of a significant cut in US interest rates this year.

In the majority of comments, Jerome Powell appeared pessimistic, contradicting market expectations of neutrality or being less pessimistic. The Federal Reserve chairman pointed at the weakness of the global economy, which casts a shadow over the US economy outlook amid uncertainty about the consequences of the trade wars that his country is engaged in with China and other countries.

The comments reinforced the strong prospects over the Federal Reserve to cut interest rates by 25 basis points this month, as the chances of a 50 basis point jumped to nearly 30% after falling due to strong US jobs data on Friday.

Meanwhile, investors are anticipating the release of the ECB's latest meeting minutes by 11:30 GMT, which will certainly provide strong evidence on the future of monetary policy in the euro area.

Mario Draghi, governor of the European Central Bank, said after the meeting on June 6 that members of the bank are ready to cut interest rates and inject new monetary incentives in the form of bonds to support the economy in the euro area.

Draghi added that these measures may come at a time when the risks surrounding the economy, especially the global trade war, and the separation of Britain from the European Union are increasing.