Euro Slides Near One-Week Low as ECB Tightens

The euro has held steady around $1.16, near its lowest level in over a week. This comes as the US dollar remains supported by expectations that the Federal Reserve will raise interest rates next week following hotter-than-expected core inflation data.

The European Central Bank (ECB) raised interest rates by 25 basis points on Thursday, warning that inflation is likely to remain above its 2% target for an extended period. ECB President Christine Lagarde called the decision a 'no-brainer' and cautioned that the return to target could be delayed further.

With the inflation outlook deteriorating sharply, further tightening is increasingly seen as likely. Money markets are pricing in three additional ECB rate increases by March next year, followed by a fourth by June.