- The euro extended losses on Thursday, falling to five-week lows against the dollar, after European Central Bank President Mario Draghi reiterated the bank is prepared to take further steps, including unconventional measures, to stave off the risk of deflation in the euro zone.

EUR/USD fell to lows of 1.3702, the weakest since February 28 and was last down 0.43% to 1.3707.

The pair was likely to find support at 1.3660, the low of February 26 and resistance at 1.3750.

Draghi confirmed that the ECB voted to leave its benchmark interest rate unchanged at a record-low 0.25%. The central bank also held its marginal lending rate at 0.75% and left its deposit facility rate unchanged at zero.

The decision to leave rates on hold came despite data earlier in the week showing that the annual rate of euro zone inflation slowed to 0.5% in March, the lowest since November 2009. The ECB targets an inflation rate of just under 2%.

Draghi said the bank sees a prolonged period of low inflation in the euro zone, followed by a gradual upward movement. The bank expects inflation to pick up slightly in April, and to gradually increase in 2015.

The ECB was resolute in its determination to maintain a high degree of accommodative monetary policy, Draghi said.

He added that the bank did not exclude further monetary policy easing, before firmly reiterating the ECB''s forward guidance that interest rates will remain at their current levels, or lower, for an extended period.

Draghi said the ECB''s governing council was "unanimous" in its commitment to using all unconventional instruments within its mandate to cope with the risk of low inflation becoming entrenched. He added that the bank discussed the possibility of negative deposit rates.

The ECB president said the euro exchange rate is an increasingly important factor and is part of the bank’s medium-term assessment.

In the U.S., the Labor Department reported that the number of people who filed for unemployment assistance last week increased by 10,000 to 326,000 from the previous week’s revised total of 310,000.

Analysts had expected jobless claims to rise by 7,000 to 317,000 last week.

Meanwhile, the Institute of Supply Management said its non-manufacturing purchasing manager''s index rose to 53.1 in March from 51.6 in February, just slightly short of expectations for a reading of 53.5.

A separate report showed that the U.S. trade deficit unexpectedly widened to $42.3 billion in February from a deficit of $39.28 billion the previous month.

Analysts had expected the U.S. trade deficit to narrow to $38.5 billion.

The euro was also lower against the yen, with EUR/JPY down 0.16% to 142.37.

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