EUR suffers defeat. Overview for 15.09.2023

The main currency pair is holding a weak position on Friday. The current EURUSD exchange rate stands at 1.0649.

The major currency pair experienced strong pressure yesterday. The European Central Bank held its meeting and raised the interest rate by 25 basis points to 4.5% per annum. The euro would have survived this decision quite well, were it not for the regulator’s remarks on the meeting outcome.

The ECB said that the interest rate was at a level sufficient in the long run for taking inflation under control. This means the regulator is ready for a monetary pause and is preparing to keep borrowing costs high for as long as necessary to reduce price pressures. The inflation target remains at 2%.

The market reacted with heavy selling. The euro/dollar collapsed by almost a figure in the first hours after the decision and then tried to stabilise.

Against this background, statistics from the US did not receive attention. The PPI in August soared by 1.6% y/y after a 0.8% y/y gain earlier. Retail sales in August saw a 0.6% m/m increase, while economists had expected an expansion of only 0.2% m/m. All these indicators point to pro-inflationary signals, which is concerning ahead of the upcoming Federal Reserve meeting next week.