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The moves follow ECB officials’ confirmation they are undeterred by the more cautious outlook in the US “- where a hot inflation reading spurred a major hawkish repricing Wednesday. That led traders to stick to wagers that policymakers will deliver a quarter-point cut in June.

Meanwhile, money markets pushed back the expected start date for the Federal Reserve’s easing by one meeting to September. This has sent the yield spread between two-year Treasuries and German bonds to the highest level this year.

“The euro’s fall to $1.07 is telling us that a June rate cut is the current thinking. A break of that level will be an important step on the road to $1.05,” said Brad Bechtel, head of FX at Jefferies in New York. The euro will likely hit that level around the time that the ECB starts to ease, he added.

Options traders are increasingly bearish on the euro, with one-month risk reversals “- a barometer of market positioning “- moving to the most dollar-bullish levels since October.

Also April data from the Depository Trust & Clearing Corporation suggest low conviction that the euro could weaken much below the psychological support level of $1.05.