The euro was trading close to seven-and-a-half month lows against the dollar on Thursday as investors waited to see whether the European Central Bank would announce fresh monetary easing measures after its meeting later in the day.
EUR/USD was down 0.33% to 1.0577, not far from Wednesday’s lows of 1.0549, the weakest level since April 14.
The single currency remained broadly weaker after data on Wednesday showing that the annual rate of inflation in the euro area rose just 0.1% in November added to pressure on the ECB to step up measures to shore up the flagging recovery in the region.
The ECB targets inflation of close to, but just below 2%.
The data hardened expectations that the ECB could announce fresh measures to bolster price growth. At its October meeting ECB head Mario Draghi indicated that more stimulus was a possibility.
Many analysts expect the ECB to cut some deposit rates deeper below zero and to expand the bond-buying program that it launched in March.
The euro was also weaker against the yen and the pound, with EUR/JPY slipping 0.18% to 130.62 and EUR/GBP down 0.21% to 0.7084.
Demand for the dollar continued to be underpinned by expectations for a rate hike by the Federal Reserve later this month.
Remarks by Fed Chair Janet Yellen, who said Wednesday that she was “looking forward” to an interest rate increase, highlighted the diverging monetary policy stance between the Fed and other world central banks.
The dollar moved higher against the yen and the Swiss franc, with USD/JPY up 0.2% to 123.47 and USD/CHF advancing 0.55% to 1.0239.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 100.28, holding just below the seven-and-a-half month peaks of 100.54 set on Wednesday.