Euro drops under $1.10; USD hits 11-1/2 year peak

Futures Now: The euro Plunge

The euro fell on Thursday below $1.10 for the first time since 2003 and the U.S. dollar added to gains against an index of currencies after the European Central Bank said it will next week launch a massive bond-buying program meant to boost economic growth.

The euro zone common currency, which has lost about 15 percent against the dollar in six months, briefly traded under $1.10 for the first time since September 2003 and hit a session low of $1.0988.

It is also on track for a third consecutive weekly loss against the greenback. The euro is also on track for its ninth consecutive monthly loss against the dollar, which has never happened before. February also marked the eighth loss in a row for the euro. Before then, the longest monthly losing streak for the euro vs the dollar was seven months, according to FactSet.

It was last off near 0.50 percent at $1.10265 in selling that accelerated after a news conference by ECB chief Mario Draghi.

Draghi spoke after the ECB, in its battle against euro zone economic sluggishness and low inflation, pushed up its 2015 and 2016 growth forecasts and fixed a March 9 start date for bond purchases of 60 billion euros a month.

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Analysts have suggested the ECB would distort the bond market by buying bonds with negative yields. Draghi said it would only steer clear of bonds yielding less than the ECB's -0.2 percent deposit rate.

"Some people are interpreting some of the comments by Mario Draghi as very dovish for the euro," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie in New York. "That's why we broke through some stops and got down to about 1.10."

ECB QE to launch on Monday

Draghi also said the central bank would continue to buy government bonds beyond 2016 if it hand not reached its inflation goal by then.

"Mr. Draghi is showing that the ECB is determined to continue until it gets the results it needs. They are perfectly aware that they cannot afford to fail," Allianz Global Investors senior fixed income portfolio manager, Mauro Vittorangeli, said.

Draghi's remarks also led to European shares reached their highest levels in more than seven years on Thursday.

Against the British pound, the euro was last off 0.26 percent at about 72.40 pence after earlier touching lows last seen in December 2007.

The dollar hit a fresh 11-1/2 year high against a basket of major currencies. The dollar index rose as high as 96.593, its strongest since September 2003, and last stood at 96.37, up near 0.40 percent.

Against the yen, the dollar pushed through the 120 yen level and was last up 0.35 percent at 120.15 with traders citing buying by U.S. macro funds keen to cover short dollar positions.

Currency traders were also focused on Friday's U.S. employment report for February, when harsh winter weather in large portions of the United States may have curbed hiring, Wizman said. The labor market has been a central driver of America's relatively bright economic outlook and the dollar's rally.

European stock prices were supported by the ECB's latest effort to jump-start the struggling euro zone economy, while U.S. equities were little changed as investors awaited direction from the government's monthly labor report due out on Friday.