Investing.com -- EUR/USD fell mildly on Thursday as the minutes from meetings by the Federal Reserve and European Central Bank last month provided further signals of continued divergence between two of the world's top central banks.
The currency pair traded between 1.1071 and 1.1150, before settling at 1.1104, down 0.15% on the session. At session's lows, the euro fell below 1.11 against the dollar for the first time in two weeks. With the slight losses, the euro posted its fifth straight loss versus its American counterpart and seventh over the last 10 sessions.
EUR/USD likely gained support at 1.0538, the low from December 3 and was met with resistance at 1.1496, the high from Oct. 15.
The euro hit session lows against the dollar on Thursday in European afternoon trading after the ECB released the minutes from a closely-watched meeting last month. While the ECB's governing council opted to leave interest rates unchanged at the meeting, it sent strong indications that it could approve widespread measures in March aimed at spurring economic growth and boosting stubbornly low inflation. A closer view of the minutes could stoke expectations for further stimulus when the Governing Council convenes for its next monetary policy meeting on March 10.
"It needed to be reaffirmed that, if the Governing Council had to intensify the use of the available range of policy options in order to achieve its price stability mandate, it would not hesitate to do so," the ECB said in the minutes.
"Reassurance needed to be given that the Governing Council had a variety of instruments at its disposal to respond to circumstances and that there was no limit to how far it was willing to deploy instruments within its mandate to achieve the objective of inflation rates below, but close to, 2% over the medium term. This would help to anchor inflation expectations and underline the significant differences in the monetary policy cycles between major advanced economies."
At the same time, the ECB is hoping to avoid the missteps that hampered its progress at a meeting in December when it failed to meet market expectations by approving only limited easing measures with its comprehensive asset purchasing program. As a result, the euro enjoyed its strongest one-day performance against the dollar in more than a year and government bond prices tumbled.
Across the pond, investors also reacted to the release of January minutes from the Federal Open Market Committee over the previous session. The minutes from the Fed's first meeting since its historic rate decision in December, depict a divided committee torn on the timing of the pace of tightening needed to help fulfill its dual mandate. While several participants noted that further tightening delays could potentially lead to excessively high inflation, other members expressed concern that premature rate hikes could dampen progress in the economy and labor markets, the minutes showed. Long-term inflation has remained below the FOMC's targeted goal of 2% for every month over the last three years.
In December, the FOMC abandoned a seven-year zero interest rate policy by raising the target range on its benchmark Federal Funds Rate by 25 basis points to 0.25 and 0.50%.
The CME Group's (O:CME) Fed Watch tool increased the probability of one rate hike in 2016 to 33.9% on Thursday, up from an average of 15.1% a day earlier. The odds of a 25 basis point increase in March are still slim. Currently, there is a 4.1% chance of a Fed hike next month, according to the CME Group, down from nearly 30% a month earlier.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.15% to an intraday high of 97.09, before closing at 96.84, down 0.04%.
Any rate hikes by the Fed this year are viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.