Summary The euro soared to a two-and-a-half-year high after the ECB kept its interest rate at all-time low.
LONDON (AFP) - The euro soared Thursday to a two-and-a-half-year high after the European Central Bank kept its interest rate at all-time low, but then tumbled on hints of more easing.
At about 1240 GMT, the single currency surged to $1.3993, which was the highest level since October 31, 2011.
It then dived to $1.3887 in mid-afternoon London deals, after ECB chief Mario Draghi hinted that fresh easing measures could be unveiled next month.
"Draghi walked the euro higher by not taking action this month, and then walked it lower by hinting at the potential for action in June," said Kathleen Brooks, research director at trading site Forex.com.
"The move higher was a knee-jerk reaction to the ECB remaining on hold, but it did not last long," she told AFP.
The bank, meeting this month in Brussels, held its key "refi" or refinancing rate at 0.25 percent for the seventh month in a row, as widely expected.
However, speaking after the decision, ECB president Draghi gave a strong hint of an imminent cut in eurozone interest rates soon.
Draghi said the decision-making body was "comfortable" with the idea of easing monetary conditions in June.
"The governing council is comfortable with acting next time, but before, we want to see the staff s projections that will come up in early June," Draghi said.
The ECB is scheduled to publish its latest updated growth and inflation forecasts next month.
"Draghi warnings of a potential June policy move has sapped some momentum from euro/dollar for now," said Rabobank analyst Jane Foley.
"However, further stimulus may increase the interest in peripheral assets and therefore there is no guarantee that an ECB move will lead to a sustained downtrend in euro/dollar. Only a stronger dollar would guarantee that."
