Euro Falls As Fed Rate Hike Worries Weigh

The euro depreciated against its major counterparts in the European session on Thursday, as investors continued to worry about the Federal Reserve tightening its monetary policy at a much faster pace to control inflation.

U.S. President Joe Biden said on Wednesday that the central bank should recalibrate the policy support in the wake of recent price increases and strengthening of the economy.

While three rate hikes are already priced in, some analysts forecast a fourth one for this year.

Members broadly agreed that progress on economic recovery and towards the Governing Council's 2% medium-term inflation target permitted a gradual normalisation of the monetary policy stance, the minutes from December 15 and 16 showed.

"Given the measurable progress made in the convergence of medium-term inflation towards the target, there was no need for a further loosening of the stance through additional asset purchases," the minutes said.

The euro pulled back from its previous 2-day high of 130.09 against the yen, with the pair trading at 129.45. The pair was worth 129.67 when it ended deals on Wednesday. On the downside, 125.00 is possibly seen as the next support level for the euro.

After gaining to a 2-day high of 1.1369 against the greenback in the Asian session, the euro moved down to 1.1331. The pair had closed Wednesday's deals at 1.1342. The euro is seen finding support around the 1.12 mark.

The euro declined to 0.8317 against the pound, after rising to 0.8339 at 2:45 am ET. The euro-pound pair had finished yesterday's trading session at 0.8331. Next key support for the euro is likely seen around the 0.82 level.

The euro depreciated to a fresh 2-week low of 1.5612 against the aussie, compared to Wednesday's close of 1.5719. The euro is likely to face support around the 1.53 region, if it falls again.

The euro retreated to 1.6684 against the kiwi and 1.4149 against the loonie, down from its prior 2-day highs of 1.6797 and 1.4210, respectively. The euro had finished Wednesday's deals at 1.6710 against the kiwi and 1.4192 against the loonie. The euro is poised to challenge support around 1.64 against the kiwi and 1.10 against the loonie.

The European currency remained lower against the franc and was trading at 1.0379. At Wednesday's close, the pair was valued at 1.0386. Further downtrend may take the euro to a support around the 1.02 area.