The question posed before the European Central Bank meeting was how much of an interest rate hike would make a difference to combat UK inflation as well as other factors. The ECB surprised the market by hiking the rate about 50 basis points. As a result, the euro is significantly impacted amidst the uncertainty.
Was this really needed? The ECB deemed it was for a number of reasons. Although a reason for the rate hike could have been to strengthen the euro, ECB President Christine Lagarde did not take a dovish tone even when the euro dipped past all gains when she spoke about the new tool, Transmission Protection Instrument.
However, a rate hike will turn things around for EUR traders. It will be interesting to see how this will pan out in the coming few months. Trading through uncertainty, its important to know that all trading carries risk. Please see the following link to learn more about what components lead the ECB to hike their rate by more than expected: