EUR/USD Slumps After Fed Rate Hike and Hawkish Tone

The EUR/USD currency pair started the new week under pressure due to the Federal Reserve's recent interest rate hike and hawkish tone.

Last week, the Fed raised its benchmark interest rate by 25 basis points to 4%, accompanied by a strong stance on inflation. This move boosted demand for the US Dollar and weighed on the Euro, sending EUR/USD more than 0.80% lower for the week to close at 1.1486.

During the post-meeting press conference, Fed policymakers emphasized their concerns about inflation and indicated that they expect only one additional rate hike this year, with no further increases currently projected for 2027.