Investing.com - The euro rose to two-week highs against the dollar after European Central Bank President Mario Draghi said there was no discussion about extending quantitative easing beyond March 2017 at the bank’s Thursday meeting.
EUR/USD was up 0.77% to 1.1324 from around 1.1289 earlier.
The ECB raised its 2016 growth forecast to 1.7% from 1.6%, but slightly lowered its 2017 forecast from 1.7% to 1.6% at Thursday’s meeting.
Draghi said current monetary policy is effective and the changes to the banks growth forecast are not so substantial as to warrant a decision to act.
He reiterated that there should be no doubt about the ECB’s will, capacity or ability to take further action if needed.
Draghi confirmed that the ECB will run its monthly asset-purchase program until March 2017 or beyond if needed, until “a sustained adjustment in the path of inflation” has been achieved.
The ECB expects the euro area economy to continue to grow at a “moderate, steady pace” and also sees a gradual increase in inflation.
Draghi warned that the euro zone recovery will be “dampened” by subdued by foreign demand arising in part from “uncertainty” following the vote by the U.K. to exit the European Union.
The ECB chief confirmed that the bank interest rate at a record-low 0.0%, in line with market expectations. The central bank also kept its deposit rate and its marginal lending rate unchanged.
He said interest rates would remain at present or lower levels for an “extended time” so the recovery would not be derailed.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to lows of 94.55, the weakest since August 26.
The dollar remained on the back foot after a report earlier in the week showing that U.S. service sector activity slowed in August to its lowest level since early 2010.
The weak data, coming after last week’s lackluster U.S. jobs report clouded the outlook for the U.S. economy and indicated that the Federal Reserve may hold off raising interest rates for longer.
The Fed raised interest rates for the first time in almost a decade in December.
Expectations of higher interest rates typically boost the dollar by making it more attractive to yield seeking investors.