Investing.com - The euro hit two-and-a-half year highs against the dollar on Thursday due to growing expectations for the European Central Bank to hold off on loosening policy any further due to improvements taking place in the continent''s economy.
In U.S. trading, EUR/USD was up 0.22% at 1.3934, up from a session low of 1.3897 and off a high of 1.3966.
The pair was likely to find support at 1.3834, Tuesday''s low, and resistance at 1.4169, the high from Oct. 31, 2011.
A spate of upbeat takes on the economy among euro zone policymakers sent the euro gaining against the dollar on Thursday despite better-than-expected indicators hitting the wire in the U.S.
On Wednesday, ECB executive board member Benoit Coeure said the monetary authority saw no indications of deflation in the euro area, while ECB Chief Economist Peter Praet noted that the euro area''s economy has improved over the past two years.
Also on Wednesday, German Finance Minister Wolfgang Schauble said interest rates in the euro zone are too low from a German point of view. He also said he doesn’t expect deflation to materialize in the euro zone.
The euro rose as markets bet the European Central Bank will hold off on implementing stimulus measures even though recent inflation rates have come in softer than market expectations.
The ECB left interest rates at a record low 0.25% at its policy meeting last week and implemented no new policy measures to shore up growth despite forecasting low inflation for years to come.
The dollar, however, saw some support from better-than-expected retail sales and jobless claims data.
The Commerce Department reported that U.S. retail sales rose 0.3% in February, ending two months of declines and better than market expectations for a 0.2% increase.
Core retail sales, which exclude automobile sales, also rose 0.3% last month, ahead of expectations for a 0.2% rise.
Separately, the Department of Labor said the number of individuals filing new claims for unemployment benefits in the U.S. fell by 9,000 to a three-month low of 315,000 last week.
Analysts had expected initial jobless claims to rise by 6,000 last week.
The euro was down against the pound, with EUR/GBP down 0.20% to 0.8350, and down against the yen, with EUR/JPY down 0.54% and trading at 142.12.
On Friday, the U.S. is to round up the week with data on producer price inflation and preliminary data from the University of Michigan on consumer sentiment.
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