Around 7:20 p.m. GMT, the euro lost 0.81% to 1.0629 dollars for one euro.
The euro fell against the US dollar on Thursday after the meeting of the European Central Bank (ECB), which promised rate hikes in July and September but maintained a cautious approach in the face of uncertainties in the eurozone economy.
The ECB promised its first hike in more than ten years in July, a decision already signaled to the markets and which had contributed to the rise of the euro since its lows in mid-May.
“Market expectations were higher,” said Joe Manimbo of Western Union.
“The market thought for next month’s meeting the door was open for a 50bp hike but it looks like they are heading for a 25bp hike and beyond September the ECB is inclined to take a more gradual path that contrasts with the more aggressive outlook of the US Central Bank (Fed),” the analyst continued.
“This difference in approach is the source of the dollar’s strength and the euro’s weakness,” he summed up.
In addition, the President of the European Monetary Institute Christine Lagarde insisted during a press conference on the attention that would be paid to the sovereign debt market in the euro zone.
The end of the asset buyback program and too rapid an increase could make the price of borrowing too high for the most indebted countries.
Already, the rate on the 10-year loan has reached its highest since the end of 2018 in Italy.
The ECB wants to avoid the risks of fragmentation of the bond market “with different levels of borrowing costs between the different countries of the euro zone”, explained Mr. Manimbo.
In addition, the ECB’s new economic forecasts show “the narrow margin” that the monetary institution can follow while inflation will climb to 6.8% this year while the GDP of the euro zone risks only increasing by 2.8% in 2022.
Another outlook supporting the dollar: Investors will look to monthly inflation data from the US on Friday where the CPI index is expected to jump 0.7% for April.
The Dollar index which compares the greenback to a basket of other currencies rose 0.63% to 103.18 points.