Reuters reported that the European Central Bank has a long way to go before it is done with interest rate hikes and it should also start reducing its oversized holding of government debt at the start of next year, Bundesbank President Joachim Nagel told a German newspaper.

"We should start shrinking our bond portfolio at the beginning of next year, for example by allowing existing bonds to expire in a market friendly way," Frankfurter Allgemeine Zeitung quoted Nagel as saying on Tuesday in an interview.

Nagel, asked about future rate hikes, also said: "There's still a long way to go.

"I am convinced that this is not the end of the rate hikes."

Meanwhile, the US dollar index which measures the greenback against six rivals, including the euro, was slightly lower at 111.49 and the euro traded flat at 0.9870.