Investing.com - The dollar dropped over 1% against the other major currencies on Thursday, pulling away from an eight-month peak after the European Central Bank cut its deposit rate and after data showed that U.S. jobless claims rose more than expected last week.
EUR/USD rallied 1.67% to 1.0789, after falling to a seven-month trough of 1.0526 earlier in the day.
The ECB's governing council lowered the deposit facility rate to -0.3% from -0.20%, in line with market expectations.
The main refinancing rate was left unchanged at a record-low 0.05%, in line with market expectations. The central bank also held its marginal lending, the rate charged to banks when they borrow from the ECB, at 0.30%.
The ECB said it was to announce "further policy measures" at its post policy meeting press conference.
Market analysts expect the central bank to increase the size of its monthly quantitative easing program to €75 billion from the current €60 billion.
USD/JPY eased 0.08% to 123.14.
In the U.S., the Department of Labor said the number of individuals filing for initial jobless benefits in the week ending November 28 increased by 9,000 to 269,000 from the previous week’s total of 260,000. Analysts expected jobless claims to rise by 8,000 last week.
The dollar had remained broadly supported since the beginning of the week amid mounting expectations that the Federal Reserve will raise interest rates at its December policy meeting.
Fed Chair Janet Yellen said on Wedesday that the central bank was still on track to hike rates this month, citing "continued improvement in the labor market" and "confidence that inflation will move back to our 2% objective over the medium term."
Elsewhere, the dollar was lower against the pound and the Swiss franc, with GBP/USD up 0.31% at 1.5001 and with USD/CHF sliding 0.77% to 1.0103.
The pound found some support after Markit said its U.K. services purchasing managers’ index rose to 55.9 last month from October's 54.9. Analysts had expected the index to rise to 55.0.
The Australian dollar was stronger, with AUD/USD up 0.18% at 0.7323, while NZD/USD held steady at 0.6638.
The Australian Bureau of Statistics reported on Thursday that the country's trade deficit widened to A$3.305 billion in October from A$2.403 billion in September, whose figure was revised from a previously estimated deficit of A$2.317 billion.
Analysts had expected the trade deficit to widen to A$2.665 billion in October.
Meanwhile, USD/CAD slipped 0.14% to trade at 1.3321.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 1.44% at 98.63, off Wednesday's eight-month peak of 100.54.