Investing.com - The euro fell more than 1% against the dollar on Thursday after the European Central Bank surprised investors with a rate cut, while data showing stronger than forecast third quarter U.S. growth also weighed.
EUR/USD hit 1.3298 during U.S. morning trade, the lowest since September 13; the pair subsequently consolidated at 1.3356, down 1.16%.
The pair was likely to find support at 1.3298, the session low and resistance at 1.3425.
The euro dropped after the ECB said it was lowering its benchmark interest rate to a record-low 0.25% from 0.5% in an unexpected decision. The bank also cut its marginal lending rate to 0.75% from 1% and left its deposit facility rate unchanged at 0.0%.
ECB President Mario Draghi said the decision was “in line” with the bank’s forward guidance on interest rate policy from July.
Draghi reiterated that euro zone borrowing costs will remain at their present or lower levels until conditions improve, indicating that further rate cuts are still possible.
The euro zone may experience "a prolonged period of low inflation", Draghi warned, followed by a gradual return back to the bank’s target of close to, but still below 2%.
He said the decline in euro zone inflation in October was stronger than expected and added that inflation is expected to remain at low levels in the coming months.
The dollar strengthened across the board after official data showed that the U.S. economy grew at an annual rate of 2.8% in the three months to September, well above expectations for growth of 2%. The U.S. economy grew by 2.5% in the preceding quarter.
The robust data reinforced expectations that the Federal Reserve could start to scale back its USD85 billion-a-month stimulus program as soon as its next monthly meeting in December.
Separately, the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. last week fell by 9,000 to a seasonally adjusted 336,000.
Analysts had expected U.S. jobless claims to fall by 10,000 to 335,000 last week from the previous week’s total of 345,000.
The dollar was at six-week highs against the yen, with USD/JPY climbing 0.44% to 99.09, after briefly touching session highs of 99.41.
EUR/USD hit 1.3298 during U.S. morning trade, the lowest since September 13; the pair subsequently consolidated at 1.3356, down 1.16%.
The pair was likely to find support at 1.3298, the session low and resistance at 1.3425.
The euro dropped after the ECB said it was lowering its benchmark interest rate to a record-low 0.25% from 0.5% in an unexpected decision. The bank also cut its marginal lending rate to 0.75% from 1% and left its deposit facility rate unchanged at 0.0%.
ECB President Mario Draghi said the decision was “in line” with the bank’s forward guidance on interest rate policy from July.
Draghi reiterated that euro zone borrowing costs will remain at their present or lower levels until conditions improve, indicating that further rate cuts are still possible.
The euro zone may experience "a prolonged period of low inflation", Draghi warned, followed by a gradual return back to the bank’s target of close to, but still below 2%.
He said the decline in euro zone inflation in October was stronger than expected and added that inflation is expected to remain at low levels in the coming months.
The dollar strengthened across the board after official data showed that the U.S. economy grew at an annual rate of 2.8% in the three months to September, well above expectations for growth of 2%. The U.S. economy grew by 2.5% in the preceding quarter.
The robust data reinforced expectations that the Federal Reserve could start to scale back its USD85 billion-a-month stimulus program as soon as its next monthly meeting in December.
Separately, the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. last week fell by 9,000 to a seasonally adjusted 336,000.
Analysts had expected U.S. jobless claims to fall by 10,000 to 335,000 last week from the previous week’s total of 345,000.
The dollar was at six-week highs against the yen, with USD/JPY climbing 0.44% to 99.09, after briefly touching session highs of 99.41.