Euro Takes Hit as ECB Rate Hike Expectations Scaled Back

European Central Bank (ECB) repricing is weighing heavily on the Euro. The ECB's aggressive rate hike expectations have been scaled back, and investors are questioning whether another hike can be delivered this year.

According to Deutsche Bank analysts, financial stress has led to growing doubts about central banks' ability to hike rates as aggressively as previously thought. Tighter financial conditions would help bring down inflation, but the recent selloff has raised concerns about the economy's ability to cope with another rate hike.

The number of further hikes priced by December's meeting fell by 6.1 basis points (bps) on the day to 23.5 bps.