New York: The euro slid on Thursday against the dollar despite a record interest rate hike by the European Central Bank as Federal Reserve chief Jerome Powell also signaled a tough approach against inflation.
Meanwhile, the pound remained close to a 37-year low against the dollar that was struck Wednesday, as new British Prime Minister Liz Truss announced that she will freeze domestic fuel bills for two years to help ease the burden of a UK cost-of-living crisis.
The British currency did not move significantly on news of the death of Queen Elizabeth II after a 70-year reign.
Inflation far too high: ECB
The ECB warned Thursday that inflation was "far too high" and likely to stay above target for "an extended period" as it announced its record 0.75 percentage point hike.
ECB chief Christine Lagarde made clear interest rates were far from where they need be to bring inflation down.
"We actually took the decision today that we would continue to raise interest rates... because we believe that we are far away from the rate at which we hope we'll see inflation return to the two percent medium term target," she said.
Lagarde also warned the eurozone risks recession if Russia completely cuts off gas, which it has nearly done.
Fed more hawkish
But comments by Fed chief Jerome Powell were seen as even more hawkish than those by Lagarde.
"We need to act now forthrightly, strongly as we have been doing and we need to keep at it until the job is done to avoid ... the kind of very high social costs" of the surge in inflation in the 1970s and 1980s, Powell told a US think tank.
Greenback 'more attractive'
Chris Beauchamp, chief market analyst at online trading platform IG, said "Investors clearly believe that the Fed is more committed to higher rates than the ECB, while the stronger economic performance of the US means the greenback and not the euro seems the more attractive prospect."
The euro, which had broken back above parity with the dollar, slid down as far as $0.9934 before recovering some ground.
The Fed has made it clear it plans to continue to aggressively raise interest rates to rein in surging inflation, even at the cost of causing some economic pain.
The dollar has moved ever higher against its major peers in recent weeks as investors flood into the currency hoping for better returns as the Fed raises rates and as they seek a haven in the face of economic turmoil.
Euro at 20-year low vs US$
The euro on Wednesday touched a fresh 20-year dollar low.
The Fed holds its next policy meeting on September 21, with a third successive 75-basis-point lift forecast.
In equities trading, eurozone stocks closed the day mostly higher, and Wall Street equities pushed higher following a choppy session.
Analysts said the hawkish central bank policy was largely in line with expectations.
"The resilience was construed as a sign that a lot of bad news, and worries about near-term rate hikes, have been priced in already," said Briefing.com.
Key figures at around 2130 GMT September 8, 2022
New York - Dow: UP 0.6 percent at 31,774.52 (close)
New York - S&P 500: UP 0.7 percent at 4,006.18 (close)
New York - Nasdaq: UP 0.6 percent at 11,862.13 (close)
London - FTSE 100: UP 0.3 percent at 7,262.06 (close)
Frankfurt - DAX: DOWN less than 0.1 percent at 12,904.32 (close)
Paris - CAC 40: UP 0.3 percent at 6,125.90 (close)
EURO STOXX 50: UP 0.3 percent at 3,512.38 (close)
Tokyo - Nikkei 225: UP 2.3 percent at 28,065.28 (close)
Hong Kong - Hang Seng Index: DOWN 1.0 percent at 18,854.62 (close)
Shanghai - Composite: DOWN 0.3 percent at 3,235.59 (close)
Euro/dollar: DOWN at $1.0001 from $1.0006 on Wednesday
Pound/dollar: DOWN at $1.1500 from $1.1533
Euro/pound: UP at 86.93 pence from 86.76 pence
Dollar/yen: UP at 144.07 yen from 143.74 yen
West Texas Intermediate: UP 2.0 percent at $83.54 per barrel
Brent North Sea crude: UP 1.3 percent at $89.15 per barrel