The euro dipped to a five-day low after the ECB delivered an expected 25bp rate hike and annual U.S. headline producer prices came in slightly above forecast, before trimming losses as President Christine Lagarde warned energy costs could keep inflation pressures alive.

ECB policymakers foresee more tightening ahead, potentially as early as October, two sources told Reuters.

Separately, ECB broad member and Bundesbank President Joachim Nagel said the rise of euro-skeptic parties could deter investment in Germany.

In U.S. data, producer prices increased at a monthly rate of 0.4% in August, in line with expectations, and core rose 0.2%. The annual headline rate increased at a surprisingly quick pace of 5.4%, while the previous month was revised higher.

Odds of a 25bp Fed hike next week have risen to nearly 70%, though Friday's CPI report will provide a clearer inflation picture.

WTI surged above $100/bbl on news out of the Middle East including a WSJ report that Iran restarted underground missile production in limited quantity and Iran-aligned Houthis advanced down the Red Sea coast.

EUR/USD pared an ECB- and PPI-driven slide to 1.1592, with a long-tailed candle beneath its 200-day moving average of 1.1633 and rising 21-day moving average offering bulls comfort.

GBP/USD eased after U.S. data but remains anchored near recent high by 1.3566 awaiting a slew of central bank policy decisions including the Bank of England next week.

AUD/USD remained pressured after a post-PPI slide to a six-session low of 0.7157 as metal, equity, and CNH weakness reinforced dollar buying.

USD/JPY remained biased higher as surging oil and rising Treasury yields helped to work off oversold conditions, but pair may struggle to move much beyond 155 ahead of the BOJ policy meeting next week.

Treasury yields were up 8 to 12 basis points as the curve flattened. The 2s-10s curve was down about 1 basis point to +39.2bp.

The S&P 500 slipped 0.67%.

WTI oil surged more than 6%, breaching $100/bbl.

Gold slid about 1.9% while copper dropped 5.3% amid White House indecision on tariffs.

Heading toward the close: EUR/USD -0.18%, USD/JPY +0.52%, GBP/USD -0.24%, AUD/USD -0.82%, DXY +0.25%, EUR/JPY +0.33%, GBP/JPY +0.27%, AUD/JPY -0.35%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)