CANBERA (dpa-AFX) - The euro gained ground in the European session on Thursday, as the European Central Bank raised its key interest rates by a quarter basis points and hinted at further tightening amid the risk of inflation remaining higher for longer.
The Governing Council, led by ECB President Christine Lagarde, increased the main refinancing rate, or refi, by 25 basis points at 4.00 percent.
The deposit facility rate was hiked to 3.50 percent and the lending rate to 4.25 percent.
The latest ECB Staff macroeconomic projection showed that the euro area inflation outlook was revised up further, while the growth forecasts were lowered.
Core inflation, excluding energy and food, is now projected to reach 5.1 percent in 2023, before easing to 3.0 percent next year, and further down to 2.3 percent in 2025.
Eurozone economy is now projected to grow by 0.9 percent this year, 1.5 percent next year and 1.6 percent in 2025.
'The Governing Council's future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2 percent medium-term target and will be kept at those levels for as long as necessary,' the ECB reiterated.
During the news conference, President Christine Lagarde said that the governing council had not discussed a potential pause in its hiking cycle.
'Unless there is a material change to our baseline, we will continue to hike at our next meeting. So we're not thinking about pausing,' Lagarde said.
Data from Eurostat showed that the euro area trade balance posted a shortfall in April due to the fall in exports amid rising imports.
The trade deficit totaled EUR 7.1 billion in April compared to a surplus of EUR 14.0 billion in March.
The euro climbed to near a 5-week high of 1.0919 against the greenback from yesterday's close of 1.0823. The euro may face resistance around the 1.11 region, if it gains again.
The euro touched 153.38 against the yen, its highest level since September, 2008. At Wednesday's close, the pair was worth 151.60. Further rally in the currency may find resistance around the 157.00 region.
The euro advanced to a 2-day high of 0.8591 against the pound from Wednesday's close of 0.8550. The euro is seen facing resistance around the 0.88 level.
The euro rebounded to 0.9784 against the franc, heading to pierce a 2-day high of 0.9789 seen at 4:30 am ET. The pair had finished Wednesday's deals at 0.9757. The euro is likely to locate resistance around the 1.00 level.
The euro appreciated to a 2-day high of 1.7625 against the kiwi and a 2-week high of 1.4500 against the loonie from its previous close of 1.7441 and 1.4428, respectively. The euro may locate resistance around 1.78 against the kiwi and 1.46 against the loonie.
The euro recovered to 1.5983 against the aussie, from more than a 3-month low of 1.5848 hit at 2:10 am ET. The euro-aussie pair had finished deals at 1.5935 on Wednesday. Should the euro strengthens further, it is likely to test resistance around the 1.61 region.
Copyright(c) 2023 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX