The euro fell today and is on track for its biggest weekly loss of the year, weakened by falling core bond yields as investors added to bets that interest rates in the US would rise faster than in Europe.
Investors played the diverging monetary policy outlook between the US and Europe.
Some market watchers were taken by surprise by the degree of dovishness in comments by European Central Bank policymakers at a policy meeting yesterday.
The euro fell by 0.52% to $1.1589, its lowest since 20 July, and it is on track for its biggest weekly loss since the fourth quarter of 2016.
The dollar index, which tracks it against a basket of six major rivals, added 0.4% to hit three-month highs and on track for a weekly gain of 1.1%.
"From a broader point of view, we are somewhat surprised that the ECB did not take the opportunity to mark a sharper break with its current policy settings," Rabobank strategists said in a note.
Against the pound, the euro is 0.16% lower today at £0.8837.
Meanwhile, across the Atlantic, investor attention remains on candidates to head the US Federal Reserve when Janet Yellen's term expires in February.
US President Donald Trump's search for the next central bank chair has come down to Fed Governor Jerome Powell and Stanford University economist John Taylor, news and analysis website Politico on Thursday cited one source as saying.
A White House official told Reuters that no final decision has been made.
Trump is expected to announce his candidate before a trip to Asia in early November.