The euro reversed losses against the other major currencies on Thursday after European Central Bank President Mario Draghi said interest rates aren’t likely to be cut again after delivering a stronger-than-expected package of stimulus measures.
The euro initially weakened sharply after the ECB cut interest rates across the eurozone to new record lows and boosted its quantitative easing program.
The ECB wrong-footed markets by cutting its benchmark interest rate to a record-low of zero from 0.05%. Market watchers had been expecting no change.
The central bank also cut the deposit facility rate deeper into negative territory, to minus 0.4%, and cut the marginal lending rate cut to 0.25% from 0.30%
In addition, the ECB boosted its quantitative easing program by €20 billion per month to €80 billion, starting in April.
The bank also said investment-grade euro-denominated bonds would become eligible for purchases under its asset purchase program.
But the euro rebounded after Draghi said the ECB did not anticipate that it will be necessary to reduce interest rates further but added that this could change.
Pressure had mounted on the ECB to take fresh steps to shore up the euro area economy after consumer inflation turned negative again last month, falling 0.2%.
The ECB targets inflation close to, but just under 2%.