The euro was defensive against its key counterparts in the European session on Thursday, after the European Central Bank President Mario Draghi struck a dovish tone on region's economy, suggesting slower growth momentum in coming months, and downgraded growth forecast for next year.
In his customary press conference in Frankfurt, Draghi acknowledged that latest data had been weaker than expected, reflected by softer external demand.
Underlying inflation remained muted, although domestic cost pressures had continued to strengthen amid high levels of capacity utilization and tightening labor markets, Draghi said.
"The risks surrounding the euro area growth outlook can still be assessed as broadly balanced."
"However, the balance of risks is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility," he added.
The euro area growth forecast for next year was trimmed to 1.7 percent from 1.8 percent. The outlook for this year was cut to 1.9 percent from 2 percent.
The inflation forecast for next year was lowered to 1.6 percent from 1.7 percent. The projection for this year was cut to 1.8 percent from 1.7 percent.
The European Central Bank has left its key rates unchanged, keeping its main refi rate at a record low of zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is 0.25 percent.
The bank also said it is "enhancing its forward guidance on reinvestment."
"Accordingly, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favorable liquidity conditions and an ample degree of monetary accommodation," the ECB said in a statement.
The currency showed mixed trading against its major counterparts in the Asian session. While it held steady against the greenback and the franc, it rose against the yen and the pound.
The euro depreciated to 1.1339 against the greenback, losing 0.5 percent from a 2-day high of 1.1393 touched at 3:15 am ET. The pair was valued at 1.1368 when it ended deals on Wednesday. Continuation of the euro's downtrend may lead it to a support around the 1.12 region.
Data from the Labor Department showed that first-time claims for U.S. unemployment benefits fell more than anticipated in the week ended December 8.
The report said initial jobless claims dropped to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000.
The euro was down 0.4 percent at 128.71 against the yen, pulling away from near a 2-week high of 129.25 seen at 3:25 am ET. At Wednesday's close, the pair was quoted at 128.78. Next likely support for the euro is seen around the 127.00 level.
After advancing to a 3-day high of 1.1302 against the Swiss franc at 2:30 am ET, the euro reversed direction and moved down to 1.1269. The euro-franc pair finished Wednesday's trading at 1.1293. The euro is likely to meet support around the 1.10 region.
The Swiss National Bank maintained its expansionary monetary policy and said it will remain active in the foreign exchange market as necessary.
The SNB left its interest on sight deposits unchanged at -0.75 percent and the target range for the three-month Libor between -1.25 percent and -0.25 percent. The decision was in line with economists' expectations.
The single currency lost 0.7 percent to hit a 6-day low of 0.8952 against the pound, after rising to 0.9015 at 1:45 am ET. The pair had ended Wednesday's trading at 0.9000. The euro may test support around the 0.88 mark, if it falls again.
The euro retraced gains to 1.5162 against the loonie, from a 2-day high of 1.5221 hit at 8:30 am ET. The euro is poised to find support around the 1.49 level.
The euro dropped to 1.6511 against the kiwi, following an advance to 1.6613 at 7:00 pm ET. The euro is seen finding support around the 1.64 level.
Having advanced to a 2-day high of 1.5765 against the aussie at 7:00 pm ET, the euro gave up its gains with the pair trading at 1.5698. Further downtrend may see the euro challenging support around the 1.55 mark.
The U.S. monthly budget statement for November is scheduled for release at 2:00 pm ET.
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