Euro Slides Against Dollar as ECB Hike Takes Effect

The Euro is trading lower against the US Dollar as the European Central Bank's (ECB) interest rate hike takes effect on Wednesday, the same day the Federal Reserve is expected to raise its own rate for the first time since July 2023.

The ECB raised its deposit rate to 2.50% earlier this month, and that increase becomes official on Wednesday. This move widens the gap between the interest rates of the two central banks, with the Fed's range topping out at 4.00%, compared to the ECB's 2.50%.

The higher interest rate in the US is due to a barrel of Crude Oil above $100.00 after Saudi Arabia shut its pipeline around the Strait of Hormuz. The United States is a net exporter of petroleum, while the Euro area imports nearly all of its Crude Oil.