The Euro remained near a four-week low against the Dollar on Thursday as traders awaited a widely anticipated interest rate cut from the European Central Bank (ECB).

Market participants were focused on the policy outlook to assess the potential for further rate reductions.

The single currency was up 0.06% at $1.1018 at the time of writing but stayed close to the previous session's low of $1.1002, its weakest point since 16th August.

The ECB is highly expected to reduce interest rates by 25 basis points later on Thursday, following its previous cut in June that brought the deposit rate down to 3.75%, Reuters reports.

A range of policymakers have already expressed support for a rate cut this month, indicating that their discussions will likely focus on the pace at which borrowing costs should decrease in future meetings, amid a backdrop of sluggish economic growth and easing inflation.

“We're a little bit more downbeat about the outlook for the eurozone,” according to Colin Asher, senior economist at Mizuho Bank.

“And the fact that inflation risks have probably shifted more towards the downside and inflation expectations are under control will probably allow the ECB to cut not only in September and December, but also in October.”

Financial markets have fully priced in another rate cut by December, while the likelihood of an interim cut in October is estimated at around 37%.

Traders are anticipating a total of 64 basis points in rate cuts from the ECB by the end of the year, compared to 103 basis points expected from the Federal Reserve, which is poised to lower borrowing costs next week for the first time in four years.

Furthermore, data released on Wednesday indicated a slight increase in US consumer prices for August, with underlying inflation remaining persistently high. 

Consequently, traders reduced their expectations for a 50-basis-point rate cut by the Fed on 18th September, bringing the probability down to 13% from 40% a week earlier, according to CME Group's FedWatch tool.

“Market pricing for 2024 Fed cuts had been close to its ceiling, leaving it vulnerable to signs of US data steadying out,” stated a report by TD Securities analysts.