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ECB takes the deposit rate to 2.50% — the euro still lost the week
A fully priced 25 bp ECB hike and a “no path” press conference were not enough once the Fed went hawkish. EUR/USD closed the following week below 1.1500. German state votes added a political overlay.
6 min read · 10 September 2026
What the Governing Council did
On 10 September the ECB raised all three key rates 25 bp. The deposit facility moved to 2.50%, main refinancing to 2.65%, and the marginal lending facility to 2.90%, effective 16 September. Staff still see 2026 headline inflation around 3.0% — well above the 2% target — with the Middle East conflict named as the inflation impulse. Lagarde called the decision a “no-brainer” and refused to pre-commit to October.
Why the euro still sold off
The hike was in the price. All 65 economists in the pre-meeting Reuters poll expected 2.50%. FX trades the differential. A week later the Fed hiked and signalled more. Two-year euro-dollar spreads widened. EUR/USD broke toward 1.1456, a seven-week low, and on Monday 21 September sat near 1.1482 — still below 1.1500.
Politics on the overlay
Voting projections put Alternative for Germany first in northeastern state elections, a blow to Chancellor Friedrich Merz’s conservatives. That is not an ECB statement. It is a reminder that EUR is a political currency as well as a rate currency. Treat it as colour on the pair, not as a one-print order.
What the desk watches next
Lagarde’s remarks this week and the 29 October meeting. Oil and the Gulf ceasefire path still sit in the inflation fan chart. If the Fed’s October odds fade and European growth prints hold, EUR/USD can repair. If DXY keeps 100, 1.1500 stays a ceiling, not a floor.
Risk note
A central-bank hike is not automatically euro-positive. Quote the spread versus the Fed, not the headline. This note is not a recommendation to buy or sell EUR/USD.
These notes are education, not a recommendation to trade, and not a solicitation. Leveraged FX can return a total loss of capital, quickly. Nothing here is personal advice. SummitFx does not hold client funds. Read the risk disclosure.