The euro rose to a day's high on Thursday shortly after the European Central Bank (ECB) released minutes of its January meeting.
The currency hit $1.23085 at around 12:30 p.m. London time (7:30 a.m. ET) but it eased some of that strength a few minutes later.
ECB minutes showed that inflation, the most important economic indicator at the central bank, is picking up at a faster pace. As a result, some market participants briefly interpreted that as an indicator that monetary stimulus will come to an end earlier than previously thought.
"Inflation expectations in the ECB Survey of Professional Forecasters (SPF) for the first quarter of 2018 showed average inflation expectations of 1.5 percent, 1.7 percent and 1.8 percent for 2018, 2019 and 2020 respectively. Compared with the previous survey round, this represented upward revisions of 0.1 percentage point for 2018 and 2019," the minutes read.
"Longer-term market-based measures of inflation expectations had increased further, in line with the gradual upward trend observed since the middle of 2017."
In this context, the minutes showed that the ECB could revisit its monetary policy "early this year" but the bank considered that it was too early to do so last month.
"The language pertaining to the monetary policy stance could be revisited early this year as part of the regular reassessment at the forthcoming monetary policy meetings... However, it was concluded that such an adjustment was premature and not yet justified by the stronger confidence," the bank said in the minutes.