By Karen Brettell
NEW YORK (Reuters) -The U.S. dollar gained on Thursday after its recent weakness across peer currencies appeared exhausted for the time being, while the euro weakened slightly after the European Central Bank cut rates for the seventh time in a year.
The greenback has largely stabilized this week and held within a tight range against the single currency, following large drops last week that were prompted by concerns over the economic impact of tariffs and investors shifting investments overseas.
“We’ve had a pretty impressive run of strength for most of the G10 currencies and so I think we’re just in a bit of a pause phase right now,” said Eric Theoret, FX strategist at Scotiabank (TSX:BNS). “Our medium-term view’s still bearish for the U.S. dollar, so we’re just seeing this as a bit of a consolidation.”
Traders are closely watching discussions between U.S. President Donald Trump’s administration and trading partners for signs of a deal that may offer some clarity on the objectives of the Trump administration.
Trump on Thursday said he expects to make a trade deal with China, though he offered no specifics or indications of how talks would get underway with the two superpowers at an apparent impasse.
Trump and close ally Italian Prime Minister Giorgia Meloni expressed optimism about resolving trade tensions that have strained U.S.-European relations, ahead of talks at the White House.
Trump also touted "big progress" in tariff talks with Japan on Wednesday.
The ECB cut interest rates to their lowest level since late 2022, looking to prop up an already struggling euro zone economy that will take a large hit from U.S. tariffs.
"It has a dovish tone. Focus has shifted to looking at the downside risk to the growth outlook, rather than upside risk to inflation,” said Kirstine Kundby-Nielsen, FX analyst at Danske Bank (CSE:DANSKE).
U.S. Federal Reserve Chair Jerome Powell said on Wednesday the Fed would wait for more data on the economy’s direction before changing interest rates, but cautioned that Trump’s tariff policies risked pushing inflation and employment further from the central bank’s goals.
Trump responded on Thursday that Powell’s termination "cannot come fast enough", while calling for the U.S. central bank to cut interest rates.
Data on Thursday showed that the number of Americans filing new applications for unemployment benefits fell last week, suggesting labor market conditions remained stable in April.
The euro was last down 0.41% on the day at $1.1351 and is holding below a three-year high of $1.1473 reached on Friday. Against the Japanese yen, the dollar strengthened 0.51% to 142.54. It earlier reached 141.60, the lowest since September 18.
Trading volumes have dwindled ahead of Good Friday, when most U.S. markets will close though foreign exchange will remain open.
Against the Swiss franc, the dollar strengthened 0.97% to 0.821.
Meanwhile the kiwi gained 0.59% to $0.5968 following data showing that New Zealand consumer prices rose faster than expected in the first quarter. The New Zealand currency earlier reached $0.5975, the highest since November 11.
The Aussie strengthened 0.24% to $0.6385. Data showed Australian employment rebounded in March.
Sterling gained 0.1% to $1.3253 after hitting $1.3292 on Wednesday, the highest since October 2.
In cryptocurrencies, bitcoin increased 0.97% to $85,117.