Investing.com - The euro touched the day’s lows against the dollar on Thursday after European Central Bank President Mario Draghi warned that inflation is likely to remain low for some time, while U.S. data pointed to a tightening labor market.
EUR/USD fell to lows of 1.1114 from around 1.1183 earlier, before pulling back to 1.1167.
The ECB revised its inflation forecast for 2016 up to 0.2% from 0.1% before, but kept its inflation forecasts for 2016 and 2017 at 1.3% and 1.6% respectively.
Draghi warned that inflation in the euro area is likely to remain very low, or negative, for some time.
The central bank raised its growth forecast for 2016 to up to1.6%, from 1.4%, but left its forecasts for the following two years unchanged.
Draghi said the economic recovery is proceeding ‘gradually’, but warned that the risks to the global economy are to the downside, citing the June 23 U.K. referendum on European Union membership.
Draghi said the ECB believes that Britain should stay in the EU, but added that it was ready for any outcome.
The comments came after the ECB left its headline interest rate at record low of zero. The bank held the deposit rate at -0.4% and the marginal lending facility at -0.25% at its monetary policy meeting.
The dollar found support after reports showing that U.S. private sector hiring increased in May and initial jobless claims fell last week.
Payroll processing firm ADP said U.S. nonfarm payrolls rose by 173,000 last month, broadly in line with forecasts.
April's figure was revised up to 166,000, from a previously reported increase of 156,000.
The data came a day ahead of the government’s more comprehensive nonfarm payrolls report for May.
Separately, the Labor Department said initial jobless claims dropped by 1,000 to 267,000 last week.
Economists had expected claims to rise to 270,000 last week.
Claims have now remained below the 300,000 mark, associated with a strong labor market, for 65 straight weeks.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 95.42, off lows of 95.15.
The dollar was still at two-week lows against the yen following the reports, with USD/JPY down 0.86% at 108.59.
The yen remained firmer a day after Japan delayed a planned sales tax increase, fueling speculation that the country is shifting away from monetary easing towards fiscal stimulus.