Investing.com — The U.S. dollar retreated in early European trade Friday, while the euro rebounded from multi-month lows after the European Central Bank's latest meeting signaled the rate hike will be its last.
At 03:20 ET (07:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower to 104.982, falling from the previous session’s six-month peak of 105.43.
EUR/USD rose 0.2% to 1.0667, bouncing from Thursday’s new three-month low seen in the wake of the latest ECB policy-setting meeting.
Although the central bank raised its key interest rate by 25 basis points to a record peak on Thursday, it also signaled this will likely be its final increase in its more-than year-long fight against high inflation.
“With today's decision we have made sufficient contributions under current assessment to returning inflation to target in a timely manner," said ECB Christine Lagarde, in the press conference following the rate announcement.
The central bank also raised its forecasts for inflation, which it now expects to come down more slowly towards its 2% target over the next two years, while cutting its expectations for economic growth.
“A further weakening of the economy and more traction in a disinflationary trend will make it very hard to find arguments for additional rate hikes any time soon,” analysts at ING, said in a note.
The dollar had surged overnight after U.S. retail sales received a boost from higher gasoline prices, increasing 0.6% in August versus an estimated 0.2% rise, while U.S. producer prices rose by more than anticipated in August.
The Federal Reserve is still expected to keep interest rates on hold when it meets next week, but the resilience of the economy is
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