Euro holds near $1.16 as Fed hike odds rise
The euro traded around $1.16 near its weakest level in more than a week as the dollar stayed supported by expectations the Federal Reserve will raise rates next week after hotter-than-expected US core inflation. The ECB raised rates on Thursday and warned inflation may remain well above target for an extended period.
16, close to its weakest level in more than a week, as the dollar stayed supported by rising expectations that the Federal Reserve will lift interest rates next week after hotter-than-expected US core inflation data. In Europe, the ECB increased rates by 25 basis points on Thursday and said inflation is likely to stay well above its 2% target for an extended period. ECB President Christine Lagarde described the move as a “no-brainer” and said the return to target, currently forecast for the end of 2027, may be pushed back further. Sources familiar with the talks said further tightening is increasingly likely, with another hike potentially as soon as October.
Money markets are pricing in three more ECB rate increases by March next year, followed by a fourth by June.