The US dollar held around a nearly 14-month low against the euro on Thursday on growing expectations of more hawkish monetary policies in Europe and Canada and on skepticism of another Federal Reserve interest rate increase this year. The euro jetted to $1.1444, its highest since May 11, 2016, with European Central Bank sources' attempt on Wednesday to moderate the message from Tuesday's speech by President Mario Draghi falling largely on deaf ears.
The speech convinced markets that the central bank was preparing to start withdrawing its own emergency stimulus for the euro zone economy later this year.
Meanwhile, comments from Bank of England Governor Mark Carney and two top Bank of Canada policymakers on Wednesday ramped up expectations for interest rate increases from those central banks.
"The shifting monetary policy trajectories of other central banks is making other currencies more attractive relative to the US dollar," said Kathy Lien, managing director at BK Asset Management in New York.
The euro was last 0.5 percent higher against the dollar at $1.1437. The dollar index, which measures the greenback against a basket of six major rivals, was down 0.4 percent at 95.597.
The index hit a roughly nine-month low of 95.531 in afternoon US trading after the Congressional Budget Office (CBO) forecasts for real US gross domestic product growth in 2017 and 2018 came in slightly lower than the January estimate.
Analysts also said lingering doubts among traders that the Fed would be able to raise interest rates again this year hurt the dollar, which is expected to benefit from such increases.
"The market is a little skeptical about the Fed outlook for another rate hike this year," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Esiner said that skepticism, combined with the more hawkish signals from other central banks, hurt the dollar because it disrupted expectations held since mid-2014 that the Fed would become less accommodative before several other central banks.
The greenback touched a roughly five-month low of C$1.2987 against the Canadian dollar and last traded down 0.3 percent at $1.3001.
The dollar hit a more than one-month high of 112.92 yen before easing from that level to last trade 0.2 percent lower against the Japanese currency at 112.05.