Euro at one-week low following US inflation data
While high inflation rates announced in the US and Fed expectations pressure the Euro, potential new interest rate hikes by the European Central Bank are closely monitored in the markets.
Higher-than-expected core inflation data in the US and expectations that the Fed will raise interest rates led to a depreciation of the Euro, causing it to drop to its weakest level in over a week.
US Inflation and the Rise of the Dollar
Following higher-than-expected core inflation data in the US, the dollar gained value and created distinct pressure on other currencies.
Latest Situation in the Euro Area
Following these global developments, the Euro hovered near its weakest level in more than a week, trying to hold around $1.16.
European Central Bank Decisions
While the European Central Bank raised interest rates by 25 basis points on Thursday, it stated that inflation will remain above the 2 percent target for some time.
Warnings from Christine Lagarde
ECB President Christine Lagarde stated that she found the decision very sensible while warning that the timeline for returning to the target could be further delayed.
Future Interest Rate Expectations
With the worsening inflation outlook, the possibility of a new interest rate hike in October strengthened, while markets continue to price in additional hikes for next year.