Euro breaks above $1.12 after Draghi remarks

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The euro rose to a three week-high against the dollar on Thursday, rallying from a six-week low after European Central Bank (ECB) President Mario Draghi said he did not anticipate more interest rate cuts to revive a sluggish euro zone economy.

Europe's shared currency earlier took a tumble as the ECB unleashed a raft of measures, many of them not expected by markets, to stimulate euro zone growth and inflation.

The ECB sliced its marginal and refinancing rates and made a widely expected 10-basis-point cut in deposit rates. It also expanded its bond-buying program to include corporate debt.

While Draghi said he does not expect further easing, he did say interest rates will remain low for a long time.

"We're seeing this rush to cover shorts because of that one statement from Draghi that he does not anticipate further rate cuts," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"But when the dust settles, I think the euro is still going to go lower, based on the fact that the ECB exceeded market expectations with its suite of policy tools, and also market positioning heading into today's meeting was far less bearish for the euro than we saw in previous meetings."

The euro recovered from six-week lows against the dollar of $1.0823 to trade at a three-week high as money market rates in the euro zone rose to price out further deposit rate cuts. The euro was last at $1.1199, up 2 percent.

According to Bespoke, the euro is up more than 3 percent from its lows against the dollar. The firm also said that, in the history of the currency, there hasn't been a single day where the euro was down 1 percent intraday and rallied back more than 3 percent off that level.

Against the yen, the euro hit a three-week high and was last at 126.61, up 1.8 percent.

The single euro zone currency also posted gains against the sterling and the Swiss franc.

Expectations were high that ECB policymakers would deliver a telling blow in the central bank's campaign to get inflation rising again and drag the euro zone economy out of the mire after eight years of weak growth.