The euro held around $1.16, near its weakest level in more than a week, as the dollar gained support from expectations that the Federal Reserve will raise interest rates next week after hotter-than-expected U.S. core inflation. The European Central Bank raised rates by 25 basis points on Thursday and warned that inflation could remain well above its 2% target for an extended period. ECB President Christine Lagarde called the decision a "no-brainer" and said the return to target, currently projected for the end of 2027, could be delayed further. Sources familiar with the discussions said further tightening was increasingly likely, potentially as soon as October, while money markets priced three additional ECB increases by March next year and a fourth by June. The rate outlook adds to an already uncertain euro-area growth and inflation picture shaped by the Middle East conflict, energy-price volatility and the Strait of Hormuz blockade. ECB staff previously projected real GDP growth of 0.9% in 2026, 1.4% in 2027 and 1.5% in 2028, while HICP inflation was expected to reach 3.0% in 2026 and peak at 3.6% in the fourth quarter before easing toward 2%.