The euro initially jumped on Thursday after the European Central Bank (ECB) opted not to cut interest rates, but announced an emergency package of stimulus measures to cushion the economic fallout of the coronavirus pandemic.
The currency initially reversed earlier losses to gain against the dollar, but quickly bounced back below the flatline again to trade down by 0.35% at around $1.1228.
The central bank held its main deposit rate at its historic low of -0.5% and kept its marginal lending facility at 0.25%, opting not to follow the U.S. Federal Reserve and the Bank of England, both of which cut rates by 50 basis points in recent weeks. Analysts had expected the ECB to cut its main interest rate by 10 basis points to -0.6%.
However, the ECB expanded its substantial asset purchase program by 120 billion euros ($135.3 billion), and said it would offer new loans to banks and offer previously-agreed liquidity facilities at more favorable rates.
ECB President Christine Lagarde had earlier this week warned of a financial crisis similar to 2008 if policymakers and governments did not coordinate to tackle the spread of the virus, which has infected more than 127,000 people worldwide and caused 4,717 deaths, according to Johns Hopkins University.
Stock markets worldwide have been in a historic tailspin this week as the spread of the virus in Europe and the U.S. escalates. The Stoxx 600 was down more than 6.5% on the day at the time the ECB decision was announced.