Fed Rate Hike Triggers EUR/USD Sell-Off Amid Inflation Concerns

The EUR/USD pair declined to around 1.1460 during Asian trading hours on Thursday, following an interest rate hike from the US Federal Reserve (Fed). The Fed raised its benchmark interest rate by 25 basis points to a 3.75%, 4.00% range at its September policy meeting.

Fed Chairman Kevin Warsh said that inflation has been 'too high ... for too long.' Updated projections showed that a strong majority of Fed officials think another hike is possible later this year.

Karl Schamotta, chief market strategist at Corpay in Toronto, stated that the rate hike should go a long way toward restoring confidence in the Fed's commitment to fighting inflation and help remove a major headwind keeping the dollar restrained.