Investing.com - The dollar was trading close to two-month lows against the euro on Thursday and touched one-month lows against the yen after data showing that U.S. growth slowed sharply at the start of the year added to doubts over the prospect of higher interest rates.
EUR/USD was at 1.1120, not far from Wednesday’s two-month peaks of 1.1187.
The dollar weakened after data on Wednesday showed that U.S. gross domestic product grew just 0.2% in the three months to March, slowing from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.
The consensus forecast among economists was for a more moderate slowdown to 1.0%.
The dollar pared back some losses after the Federal Reserve’s rate statement said that recent indications of a slowdown in growth were probably due to “transitory factors.” However, the central bank also gave no fresh indications on the possible timing of a first rate hike.
The euro was boosted on Wednesday after a report showed that German consumer prices rose in April, easing concerns over the threat of deflation in the euro area.
Other reports showed that euro zone bank lending to the private sector ticked higher in March for the first time in three years and consumer inflation expectations rose for the first time this year, indicating that the recovery in the region is gaining traction.
The euro area was to release preliminary data on consumer prices later in the day.
USD/JPY hit one-month lows of 118.50 on Thursday after the Bank of Japan left monetary policy unchanged, before pulling back to 118.92, almost unchanged for the day.
The BoJ pared inflation forecasts and pushed back the timeframe for its inflation target after its meeting on Thursday, but held back from expanding its stimulus program, predicting that the ongoing recovery will gradually nudge consumer prices higher.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.26, holding above Wednesday’s nine-week trough of 94.75.