FOREX-Dollar gains against euro as Draghi hints at action

Thu May 8, 2014 12:16pm EDT
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* U.S. dollar gains against euro on Draghi comments

* Euro earlier rose to a 2-1/2 year high against the dollar

* Dollar index rises 0.15 percent (Adds comments, details from ECB meeting, Yellen testimony; updates prices)

By Karen Brettell

NEW YORK, May 8 (Reuters) - The dollar gained against the euro on Thursday after European Central Bank President Mario Draghi said the bank might act to stem falling inflation at its June meeting, erasing the dollar's earlier fall to a 2-1/2 year low.

Draghi said that the ECB's governing council is comfortable with the bank acting in June if price inflation forecasts warrant it.

Many economists expect a downward revision in the ECB staff's inflation forecasts, which could open the way for more stimulus such as an interest rate cut or new liquidity injections.

"They signaled through the press conference that a rate cut is likely in June. That has capped the move higher in the euro," said Martin Schwerdtfeger, a foreign exchange strategist at TD Securities in Toronto.

The euro was last down 0.34 percent against the dollar at $1.3864. It earlier rose to $1.3992, the highest since November 2011.   Continued...