By CountingPips.com
The European common currency has been on the defensive in forex trading this morning following the widely expected interest rate hike by the European Central Bank. The ECB increased the interest rate by 25 basis points to the 1.25 percent level. This marked the first interest rate increase for the ECB since July 2008 which occurred just a few 
months before the global financial crisis.
The rate hike is an attempt to combat rising price inflation as the latest inflation data out of the EU showed that prices rose by 2.6 percent on an annual basis in March. February’s annual inflation rate had registered an increase of 2.2 percent.
The ECB annual inflation target is 2.0 percent.
The Bank of England was also out with its interest rate decision today and held its interest rate at the 0.50 percent level as widely expected. The bank maintained its bond buying program at the 200B GBP level.
Euro falls in Forex
The euro has been lower in forex trading against the major currencies so far today. The euro has fallen against the US dollar, Swiss franc, British pound sterling, Japanese yen, New Zealand dollar, Australian dollar and the Canadian dollar, according to currency data by Oanda.
David Song, currency analyst at DailyFX, commented on the euro dollar exchange rate saying, “As the EUR/USD maintains the upward trend from earlier this year, the exchange rate should work its way towards the 78.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.4440-50, but fears surrounding the euro-area may continue to drag on the single-currency as the EU maintains a relaxed approach in addressing the sovereign debt crisis.”
EUR/USD Chart – The euro coming down off of yesterday’s high at the 1.4350 level to today trading below 1.4300 near 1.4280. Likely support will come in around the 1.4265 level.
