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Euro Traders Signal Skepticism Over ECB’s Rate-Hike Plans

  • Currency falls even after President Lagarde’s hawkish tone
  • Strategists cite risks from fragmentation and Ukraine war
The European Central Bank (ECB) headquarters in Frankfurt.

The European Central Bank (ECB) headquarters in Frankfurt.

Photographer: Alex Kraus/Bloomberg
Updated on

Even the prospect of an historic rate hike isn’t enough to bolster the euro, which is feeling the weight of risks from the region’s uneven economic recovery and the war in Ukraine.

The common currency shrugged off the European Central Bank’s most hawkish messaging in more than a decade and its planned reversal from an era of negative borrowing costs. While traders ramped up bets on the rate hikes seen this year, the euro extended its fall on Friday, breaking below $1.06 for the first time in nearly three weeks.