The euro fell on Thursday, putting it on track for its worst day against the dollar in a month as the European Central Bank's decision to extend its bond purchases into 2018 at a reduced rate spurred selling of the single currency. As expected, the ECB said it would cut asset purchases to 30 billion euros from 60 billion euros starting in January while also extending the scheme by nine months to September.
Draghi, who expressed some optimism about euro zone growth at his press conference, remained cautious about the region's sluggish inflation which would need continued heavy stimulus in the form of quantitative easing (QE) from the ECB. "With Draghi's openness to QE, it's a victory for the doves," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.
The ECB's move on its bond purchases came five weeks after the Federal Reserve announced its plan to shrink its $4.5 trillion balance sheet that had ballooned from three rounds of QE this month. At 10:02 pm (1402 GMT), the euro was at $1.1720, down 0.8 percent from late Wednesday. It was poised for its steepest one-day loss against the greenback since September 25, Reuters data showed.
The single currency was down 0.7 percent at 133.41 yen. It retreated from 134.48 yen reached earlier on Thursday which was its strongest against the Japanese currency since December 2015. An index that tracks the dollar against euro, yen and four other currencies hit a three-month high at 94.306. It was last at 94.247, up 0.6 percent on the day.