Investing.com - The dollar dropped against most major currencies on Thursday after the European Central Bank decided to hold off on implementing fresh stimulus measures, which sparked demand for the euro and other higher-yielding currencies.
In U.S. trading on Thursday, EUR/USD was up 0.58% at 1.2382.
The European Central Bank left interest rates on hold at their current record lows of 0.05% earlier Thursday, in a widely anticipated decision.
The single currency rose after Draghi said the ECB would reassess the success of its existing stimulus programs and the impact of weak oil prices on the euro area economy in the early part of next year.
He said the bank could potentially change the size, scale and composition of its existing stimulus programs. The governing council remains unanimous that it will take further measures if necessary, he added.
The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets have been keeping a close eye out for plans to announce purchases of government debt, and the bank's decision to remain in a wait-and-see mode gave the euro support, which came at the dollar's expense.
The ECB substantially revised down its forecasts for growth and inflation and warned that the latest forecasts do not take into account the recent steep drop in oil prices.
The bank now expects the euro zone economy to grow by just 0.8% this year, 1.0% in 2015 and 1.5% in 2016. It cut its inflation forecast for this year to just 0.5% from 0.6% and to 0.7% in 2015 from 1.1%.
Meanwhile in the U.S., the Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Nov. 29 decreased by 17,000 to 297,000 from the previous week’s revised total of 314,000, in line with expectations, though the European Central Bank served as the dollar's chief steering current.
The dollar was down against the yen, with USD/JPY down 0.06% at 119.73, and down against the Swiss franc, with USD/CHF down 0.66% at 0.9711.
The greenback was up against the pound, with GBP/USD down 0.05% at 1.5678.
The Bank of England's monetary policy committee earlier left U.K. interest rates on hold at their current record low of 0.5% and maintained the size of its asset purchase program at £375 billion.
The minutes of the meeting are to be published on December 17.
The minutes of the BoE’s November policy meeting showed that two policymakers voted in favor of 0.25% hike in the benchmark rate for the fourth consecutive meeting, and Thursday's decision to keep policy on hold softened the pound.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.08% at 1.1376, AUD/USD down 0.24% at 0.8383 and NZD/USD up 0.28% at 0.7784.
The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.39% at 88.65.
On Friday, the U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings, as well as a report on factory orders.