"We have seen the dollar weaken and the euro strengthen since the Fed decision not to taper in September. That was pushing the euro up to levels that was causing inflation to drop and a decline in the euro, so I think this is a good move," said Gary Thayer, Wells Fargo Advisors chief macro strategist.
(Read more: ECB rate cut: Analysis and reaction)
"This will help offset some of those potentially deflationary forces in Europe and hopefully keep their economy on the road to recovery," Thayer said.
The euro's steepest losses Thursday were short-lived and the single currency recovered from a low of 1.329 to above 1.34 in afternoon trading. European stock markets also gave back immediate gains. The euro recently reached its highest level in two years, when it touched 1.383 on Oct. 25.
"It (the euro) probably overreacted a little bit," said Robert Sinche, head of global foreign exchange strategy at Pierpont Securities. "I think the psychological effect and the first day trading day effect is probably bigger than necessarily justified."
"We put a sell on the euro when it was 1.38/1.370. It corrected back in line with what we thought was fair value – 134.70," he said. "We don't think there's a whole lot of downside from here. It already had most of its move."