Investing.com - The dollar edged higher against the dollar on Monday, easing back from three-month lows as trade volumes remained thin with U.S. markets closed for the Memorial Day holiday.
EUR/USD was last up 0.08% to 1.3642 after falling to lows of 1.3615 earlier in the session, the weakest level since February 13.
The pair was likely to find support at 1.3575 and resistance at 1.3658, Friday’s high.
The euro touched fresh three month lows against the dollar earlier Monday after anti-European Union and far-right parties performed strongly in European Parliament elections in some countries over the weekend.
The euro later firmed up as the election results in Greece and Italy were not seen as a threat to the stability of either government.
The pair showed little reaction after European Central Bank President Mario Draghi said Monday the bank saw a risk of a deflationary cycle taking hold in the euro zone, the latest indication that the ECB could ease monetary policy at its upcoming meeting next week.
Draghi said the ECB is ready to act should it see signs of a negative inflation spiral taking hold, and indicated that the bank is weighing a wide range of policy options, including interest rate cuts, liquidity injections or broad-based asset purchases to help shore up the fragile recovery in the euro area.
"What we need to be particularly watchful for at the moment is the potential for a negative spiral to take hold between low inflation, falling inflation expectations and credit, in particular in stressed countries," Draghi said.
"We are not resigned to allowing inflation to remain too low for too long," he added.
The comments were made at the new ECB annual conference in Sintra, Portugal.
The euro has weakened broadly against the other major currencies, falling more than 2% against the dollar since the ECB indicated at its May 8 meeting that it is comfortable with easing monetary policy as soon as its next meeting in June.
The annual rate of euro zone inflation was 0.7% in April, well below the ECB's target of close to but just below 2%.
The euro was close to 17-month lows against the pound, with EUR/GBP at 0.8099, after falling to lows of 0.8080 on Friday, the weakest level since December 2012.
The euro was steady against the yen, with EUR/JPY at 138.98, not far from the more than three-month trough of 138.13 struck last Wednesday.