EUR/USD Slumps Amid Dollar Strength, ECB Hike Falls Short

The EUR/USD currency pair declined by around 0.25% to trade near 1.1604 on Thursday, as renewed US Dollar strength pressured the Euro.

The European Central Bank (ECB) had raised all three key interest rates by 25 basis points earlier in the day, marking its second hike of the year and lifting the deposit facility rate to 2.50%. The central bank pointed to continuing inflationary pressures stemming from the conflict in the Middle East and reiterated its commitment to bringing inflation sustainably back toward its 2% medium-term target.

The ECB's latest projections show headline inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028. Inflation excluding food and energy is projected at 2.5%, 2.6%, and 2.3%, respectively, over the same period.

Across the Atlantic, US PPI increased 0.4% month-on-month in August, matching expectations but accelerating sharply from July's 0.1% rise. Annual producer inflation reached 5.4%, exceeding the 5.3% forecast and rising from 4.8%. The US Dollar Index recovered toward 99.10 after touching 98.71, supported by rising Treasury yields.