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Dollar slips vs. euro after ECB's Draghi strikes less dovish tone

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The U.S. dollar fell against the euro on Wednesday after the head of the European Central Bank said the ECB needed more time to assess whether to expand its stimulus program.

ECB President Mario Draghi said the bank was ready to act but needed more time to determine whether the slowdown in emerging markets was likely to be temporary or permanent and to assess the driving forces behind declining commodities prices and recent turbulence in financial markets.

Draghi's comments to the European Parliament's Committee on Economic and Monetary Affairs sent the euro higher against the dollar after the common currency earlier hit its lowest level against the greenback in two and a half weeks at $1.11050.

The euro also rallied to a one-week high of 73.47 pence against the sterling after Draghi's remarks.

"The ECB is really in no rush to add stimulus," said Alfonso Esparza, senior currency strategist at Oanda in Toronto.

The U.S. dollar gained earlier this week on diverging monetary policy between the ECB, which many expect to deliver more stimulus, and the U.S. Federal Reserve, which is on a path toward tightening policy. Fed Chair Janet Yellen is due to speak Thursday.

Draghi's comments surprised traders even after ECB Governing Council member Bostjan Jazbec said beforehand that it was too early for the bank to discuss changing policy and in particular prolonging the program of asset-buying.

The dollar continued to strengthen against emerging market currencies and hit an all-time high against the Brazilian real of 4.12 reals.

The Fed's policy statement and Yellen's references on Sept. 17 to worries about the global economy have reignited pressure on emerging markets currencies, said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

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The euro was last up 0.42 percent against the dollar at $1.1180. The dollar was up 0.21 percent against the yen at 120.25 yen. The dollar was up 0.49 percent against the Swiss franc at 0.9796 franc.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.05 percent at 96.24. That was off an earlier two-and-a-half week high of 96.548.

On Wall Street, the benchmark S&P 500 stock index closed down 0.2 percent.