Investing.com - The euro slumped to five-week lows against the dollar on Thursday after European Central Bank President Mario Draghi said monetary authorities remained ready to act with fresh stimulus measures should the euro zone edge closer to deflationary decline.
In U.S. trading, EUR/USD was down 0.41% at 1.3710, up from a session low of 1.3698 and off a high of 1.3804.
The pair was likely to find support at 1.3643, the low from Feb. 27, and resistance at 1.3820, Wednesday's high.
The European Central Bank left its benchmark interest rate unchanged at a record-low 0.25%, held its marginal lending rate at 0.75% and left its deposit facility rate unchanged at zero despite data released earlier this week showing that the annual inflation rate slowed to 0.5% in March, the lowest since November 2009. The ECB targets an inflation rate of just under 2%.
The ECB predicts a prolonged period of low inflation in the euro zone, followed by a gradual upward movement, Draghi said, adding that the bank expects inflation to pick up slightly in April, and to gradually increase in 2015.
Draghi added that monetary authorities did not exclude further monetary policy easing and reiterated the ECB's forward guidance that interest rates will remain at their current levels, or lower, for an extended period.
He added the ECB's governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to ward off deflationary pressures and added that the bank discussed the possibility of negative deposit rates.
Meanwhile in the U.S., the Labor Department reported earlier that the number of individuals filing for unemployment assistance last week increased by 10,000 to 326,000 from the previous week’s revised total of 310,000.
Analysts had expected jobless claims to rise by 7,000 to 317,000 last week.
Meanwhile, the Institute of Supply Management said its non-manufacturing purchasing managers' index rose to 53.1 in March from 51.6 in February, just slightly short of expectations for a reading of 53.5.
A separate report showed that the U.S. trade deficit unexpectedly widened to $42.3 billion in February from a deficit of $39.28 billion the previous month.
Analysts had expected the U.S. trade deficit to narrow to $38.5 billion.
The euro was down against the pound, with EUR/GBP down 0.19% to 0.8266, and down against the yen, with EUR/JPY down 0.41% at 142.43.
On Friday, Germany is to publish data on factory orders.
The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.