Investing.com - The euro slid to the day’s lows against the dollar on Monday as the greenback firmed up after Friday’s stronger than expected U.S. jobs report and a senior European Central Bank official reiterated that it can still ease monetary policy further.
EUR/USD hit lows of 1.1357 and was last at 1.1372, off Friday’s five-and-a-half month highs of 1.1437.
The euro weakened after ECB Chief Economist Peter Praet said it was prepared to ease monetary policy further if inflation remained low.
“The prolonged period of low inflation we are in today has increased the risks that inflation misses might become persistent, which would be deeply damaging for the economy,” he said.
Meanwhile, euro zone economic reports showed that the unemployment rate fell for a thirteenth straight month and producer prices fell more than expected in February.
The unemployment rate fell to 10.3% from 10.4% in January Eurostat said. It was the lowest rate recorded in the euro area since August 2011.
Producer prices in the euro area fell 0.7% compared to forecasts of a 0.5% decline and were down 4.2% on a year-over-year basis.
The weak inflation data underlined the challenges facing the ECB as it attempts to bring annual inflation back towards its target of close to but just below 2%.
The euro was also lower against the yen, with EUR/JPY down 0.24% at 126.94.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.12% at 94.68, off Thursday’s five-and-a-half month lows of 94.31.
The index ended the previous week down 1.65% after Federal Reserve Chair Janet Yellen said global risks to the U.S. economy justified taking a cautious approach to raising interest rates.
The dollar found some support after Friday’s nonfarm payrolls report showed that the U.S. economy added a larger-than-expected 215,000 jobs last month.
Average hourly earnings rose by seven cents last month after falling two cents in February.
The upbeat data indicated that the recovery in the U.S. economy is still on track, but despite the steady pace of jobs growth few investors expect the Fed to hike rates more quickly.
Lower interest rates make the dollar less attractive to yield seeking investors.
Investors were turning their attention to Wednesday’s minutes of the Fed’s March meeting for fresh indications on the future path of interest rates.