Lagarde's Comments Send Euro Plummeting Back to Summer Low

European Central Bank (ECB) President Christine Lagarde has urged measured hikes in interest rates, but her words have instead led to a decline in the Euro. The currency slipped back to its summer low after she stated that long-term interest rates have increased since the ECB's September meeting, which will slow growth and reduce the impact of energy costs.

Lagarde pointed out that higher yields in Europe would normally support the Euro, but now it is no longer necessary for the ECB to increase rates. This has led traders to believe that there will be fewer ECB hikes, resulting in a smaller rate lift for the Euro against the US Dollar backed by the Federal Reserve's 3.75%-4.00% interest rates.

The next key event is the October 29 decision on whether to raise interest rates again. The ECB raised its deposit rate to 2.50% on September 10, and futures priced a 60% chance of another increase at that time.