Euro Surges to Two-Week High as Fed Holds Interest Rates Steady

The euro has reached its highest point in two weeks, trading at around $1.15, as the US dollar weakened after the Federal Reserve left interest rates unchanged.

This move was largely expected by markets, with a roughly one-in-three probability assigned to a rate hike. However, despite the Fed's commitment to price stability, it offered little in terms of forward guidance.

ECB policymaker Peter Kazimir stated that at least one more interest rate increase will likely be needed to bring inflation under control, and that a weaker economic outlook could warrant even tighter monetary policy than markets currently anticipate.

Chief Economist Philip Lane also emphasized that the current inflation shock remains moderate, supporting further policy tightening. The market is now awaiting euro area inflation data later this week for fresh clues on the ECB's policy path.