The euro fell to a more than seven-week low against the dollar on Thursday after the European Central Bank shocked investors by cutting interest rates and said that policy will remain accommodative for as long as necessary.
Adding to dollar strength was data showing the U.S. economy accelerated in the third quarter while jobless claims fell in the latest week, supporting the case for a cutback in stimulus by the Federal Reserve later this year.
The ECB on Thursday cut borrowing costs to a record low of 0.25 percent in response to a sharp drop in inflation. Although some in the market had expected a rate cut as early as this week, traders said most were betting the ECB would wait until December.
At its post-meeting press conference, ECB head Mario Draghi said he sees further diminishing inflation pressures and that the central bank expects rates to remain at present or lower levels for an extended period of time.
"With the Fed's easy money days seen increasingly numbered, the ECB's more dovish and divergent outlook augurs meaningful euro depreciation over the coming weeks,'' said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
(Read more: ECB rate cut: Analysis and reaction)
The euro tumbled 1.2 percent to $1.3346, having fallen as low as $1.3295, according to Reuters data, matching the low set on Sept. 16.
It also dropped to a 10-month low against sterling and a one-month trough against the yen.