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Forex - Euro extends losses, hits fresh session lows

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Shutterstock photo - - The euro extended losses against the dollar and the yen on Thursday, falling to fresh session lows after European Central Bank President Mario Draghi indicated that the bank could implement fresh easing measures as soon as next month.

The euro fell from more than two-year highs against the dollar, with EUR/USD dropping 0.40% to 1.3855. The pair rose to peaks of 1.3994 earlier, the strongest level since October 2009.

The pair was likely to find support at 1.3800 and resistance at 1.3880.

The drop in the euro came after Draghi said the ECB governing council is comfortable with acting at its next meeting, after the bank has published fresh forecasts for inflation and growth.

Draghi said that recent weakness in inflation has been due to food and energy prices, but added that the strong euro and weak domestic demand are also pushing down inflation.

He reiterated that the ECB does not have a target for the euro exchange rate, but said that the bank would closely monitor exchange rate developments.

The euro rose to two-year peaks against the dollar earlier after Draghi reiterated the bank's forward guidance, saying that interest rates will remain at their present, or lower, levels for a considerable time, but stopped short of indicating that fresh easing was imminent.

The ECB chief said the latest data shows that the European economy is recovering, in line with the banks forecasts, but also pointed to a prolonged period of low inflation, followed by only a gradual rise in prices.

The ECB voted to leave its benchmark interest rate unchanged at the record low of 0.25% on Thursday, in a widely anticipated decision. The central bank also held its marginal lending rate and its deposit facility rate at 0.75% and zero, respectively.

EUR/JPY was last trading at 141.13, the weakest level since April 28.

Elsewhere, the single currency slumped to a three-month low against the pound, with EUR/GBP dropping 0.40% to 0.8172.

Sterling was little changed earlier after the Bank of England kept interest rates on hold at their current record low of 0.5%, as expected.

Also Thursday, the Department of Labor reported that number of people who filed for unemployment assistance in the U.S. last week fell by 26,000 to 319,000 from the previous week's revised total of 345,000.

Analysts had expected jobless claims to fall by 20,000 to 325,000. offers an extensive set of professional tools for the financial markets.

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