Investing.com - The euro was slightly lower against the dollar on Thursday as market sentiment improved, sending global stocks and the dollar higher, as investor’s awaited revised data on U.S. second quarter growth later in the day.
EUR/USD edged down 0.11% to 1.1302, following steep losses on Wednesday.
The single currency fell around 1.7% after the European Central Bank warned that the risk to its medium-term inflation target has increased and it is prepared to expand its economic stimulus program if necessary.
The single currency rose to seven-month highs earlier in the week as investors fled to the relative safe-haven currencies amid intense volatility in markets.
Investors have also been borrowing the low-yielding euro to fund investment in risk assets.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.39, having rebounded from the Monday’s seven-month trough of 92.52.
The dollar moved higher and global equities regained lost ground on Thursday, while shares in Shanghai rallied around 5% by the close of trading, snapping six days of heavy losses.
Market sentiment was helped after a senior Federal Reserve official played down prospects for an interest rate hike next month.
New York Fed President William Dudley said Wednesday the case for a September rate hike was “less compelling”, given the threat posed to the U.S. economy from recent turmoil in markets.
Steep declines in Chinese equity markets over the past week have sparked fears over a China led slowdown in global economic growth.
The turmoil in markets began when China unexpectedly devalued the yuan earlier this month, sparking fears that the economy may be slowing at a faster than expected rate.
The dollar was also higher against the yen, with USD/JPY up 0.25% to 120.22 from 119.91 late Wednesday. The pair ended that session with gains of 0.9% after rebounding from seven-month lows earlier in the week.