EUR/USD Plummets Below 1.15 as Fed Hikes Interest Rates

The Euro to US Dollar exchange rate (EUR/USD) fell below 1.15 after the Federal Reserve raised interest rates by a quarter point, taking its target range to 3.75%-4.00%. The move was widely expected and saw EUR/USD trading near 1.1462 late Wednesday, down 0.65% on the day.

RBC analysts expect two more Fed hikes in 2026, fully reversing last year's insurance cuts, citing higher growth and inflation projections and lower unemployment forecasts as evidence of policymakers' concern about persistent price pressures.

However, RBC questions how much tighter borrowing conditions can achieve, warning that higher rates could further squeeze lower- and middle-income consumers already struggling with energy bills and debt.