The euro weakened to close to 1.13 against the dollar, down slightly on its January 2022 highs, after the ECB lowered its borrowing costs for the sixth time in a row, as expected.

The central bank lowered its key deposit rate by 25 bp to 2.25%, its lowest level since early 2023, and dropped all references to a "restrictive" policy, while warning that growth prospects have worsened amid escalating trade tensions.

Traders are now mainly betting on three further 25bp cuts between now and the end of the year.

Despite this, the euro has gained around 5% against the greenback since the beginning of April, as investors reassess the dollar's role in the global financial system and increasingly view the single currency as a viable alternative.

In addition, expectations of higher defense spending, particularly in Germany, have reinforced the euro's upward momentum.