The euro tumbled on Thursday to its lowest against the dollar since June 2017 after the European Central Bank postponed the timing of its first post-crisis rate hike to 2020 at the earliest and launched a new round of cheap loans to banks.
The single currency suffered its worst day versus the greenback since the ECB previously delayed its rate-hike plan almost nine months ago.
The ECB's decision to tweak its forward guidance on rates was a surprise for many investors. The central bank also cut its growth and inflation forecasts through 2021.
"The ECB has no choice," said Joseph Trevisani, senior analyst at FX Street in New York. "There are a lot of internal problems which are impediments to growth."
Anemic domestic demand and political tensions will unlikely be resolved by an easy ECB policy stance and would keep downward pressure on the euro, analysts said.
Currencies of European countries not part of the euro zone, such as the Swedish crown and Hungarian forint, fell hard after the ECB's decision, which is aimed at battling deteriorating regional business and consumer activities, analysts said.
On the other hand, the greenback reached a new 2019 high against a basket of currencies that includes the euro as traders bet the United States would fare better than Europe in the coming months despite some soft patches in the US economy.
The euro sagged to $1.11765, its lowest level since mid-2017. It was last 1.12 percent lower at $1.1181 in late US trading.
The single currency recorded its biggest one-day loss against the greenback since June 14, 2018 when the ECB pushed back plans for a rate hike into the summer of 2019.
The euro is at risk of falling to $1.10 in the coming weeks, analysts said.
The Swedish crown fell to its weakest since Dec. 15, 2016 at 9.476 per dollar. It was down 0.66 percent at 10.586 per euro, Reuters data showed.
The Hungarian forint shed 1.38 percent against the dollar and slipped 0.2 percent against the euro.
The ICE index that tracks the dollar against a basket of six major currencies was up 0.84 percent at 97.685 after touching 97.71, which was its highest since Dec. 17.
"I don't think you will get much more on the upside," Aaron Hurd, senior portfolio manager in the currency group at SSGA in Boston, said of the greenback. "It will likely stay in a range."
Among other G10 currencies, the Canadian and Australian dollars hovered at two-month lows after investors bet their central banks would ease monetary policy as their economies slow.
The Aussie was down 0.33 percent at $0.70085, while the loonie was down 0.16 percent at C$1.3464.
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