The euro hit a
three-week low on Thursday after the head of the European Central Bank
said he saw no need to deviate from the ECB's policy path, which
includes record-low interest rates and bond-buying until at least the
end of the year.
The single currency had jumped above $1.09 EUR=
in March for the first time since early November, after ECB chief Mario
Draghi signaled a diminishing urgency for expansionary policy, with
investors moving to price in a chance of an interest rate hike in early
2018.
But ECB policymakers have since indicated that markets moved too far in pricing in policy tightening.
Draghi continued in that vein on Thursday, saying that before altering its policy stance, the ECB must have sufficient confidence that inflation would return to target over a medium-term horizon, even when the central bank's expansionary policy was scaled back.
The euro, which had been trading slightly up on the day, fell after Draghi's comments, hitting a three-week low of $1.0629, leaving it down 0.2 percent on the day.
"Draghi made it very clear that he’s not intending any change in the forward guidance, that policy still needs to remain expansionary for a very long time, and the more positive outlook depends on this expansionary stance," said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
The dollar benefited from the euro's weakness, edging up 0.1 percent against a basket of major currencies .DXY.
It had risen to a three-week high of 100.850 overnight on an upbeat ADP report on U.S. private-sector employment.
But the currency fell from the three-week high despite hawkish-sounding minutes from the latest U.S. Federal Reserve meeting, which showed most policymakers think the Fed should begin trimming its $4.5 trillion balance sheet later this year and was on track for two more interest rate hikes in 2017.
But ECB policymakers have since indicated that markets moved too far in pricing in policy tightening.
Draghi continued in that vein on Thursday, saying that before altering its policy stance, the ECB must have sufficient confidence that inflation would return to target over a medium-term horizon, even when the central bank's expansionary policy was scaled back.
The euro, which had been trading slightly up on the day, fell after Draghi's comments, hitting a three-week low of $1.0629, leaving it down 0.2 percent on the day.
"Draghi made it very clear that he’s not intending any change in the forward guidance, that policy still needs to remain expansionary for a very long time, and the more positive outlook depends on this expansionary stance," said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
The dollar benefited from the euro's weakness, edging up 0.1 percent against a basket of major currencies .DXY.
It had risen to a three-week high of 100.850 overnight on an upbeat ADP report on U.S. private-sector employment.
But the currency fell from the three-week high despite hawkish-sounding minutes from the latest U.S. Federal Reserve meeting, which showed most policymakers think the Fed should begin trimming its $4.5 trillion balance sheet later this year and was on track for two more interest rate hikes in 2017.
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