TOKYO (Reuters) – The euro wallowed close to a 21-month low against the dollar on Friday, hurt by a series of dovish signals from the European Central Bank, and the currency market braced for further volatility ahead of U.S. jobs data later in the day.
The single currency stood little changed at $1.1196 after tumbling 1 percent on Thursday to touch $1.1176, its lowest since June 2017. It has declined 1.5 percent this week.
The euro’s big hit on Thursday came as the ECB pushed back the timing of its first post-crisis interest rate hike to 2020, cut its economic forecasts and launched a new round of cheap bank loans.
The euro slid along with euro zone yields, with the 10-year German bund yield declining to its lowest since October 2016 following Thursday’s ECB meeting.
The February U.S. jobs report to be released as 1330 GMT could stack more pressure on the floundering euro.
Economists polled by Reuters expect to see 180,000 jobs added in the United States last month, after two months of staggering growth. The U.S. economy added 304,000 jobs in January and 222,000 in December.
“Whether the dollar can remain on an uptrend in the long-term is debatable, but for now a strong U.S. jobs report would provide further boost for the currency,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
That in turn would weigh on the euro, caught in a downward spiral after the ECB meeting and also shackled with Brexit woes, Ishikawa said.
The dollar index against a basket of six major currencies was a shade lower at 97.548. The index soared 0.75 percent on Thursday to brush a near three-month peak of 97.71 and was headed for a weekly gain of 1.2 percent.
The dollar “is head and shoulders above peers, but this also means that it is the currency most susceptible to potential adjustments,” said Daisuke Karakama, chief market economist at Mizuho Bank.
The greenback was down 0.15 percent at 111.44 yen , stretching overnight losses, amid risk aversion in broader markets. Global equities were lower after the ECB stoked economic growth concerns.
The yen, a perceived safe haven, attracts demand in times of political tensions and market turmoil.
The Australian dollar trod water at $0.7013 , having declined 0.9 percent this week and hitting a two-month trough of $0.7005 after data showed the economy grew at its slowest pace in two years last quarter.
The currency showed little reaction to official data on Friday showing China’s February dollar-denominated exports plunging a steeper-than-expected 20.7 percent from a year earlier, while imports dropped 5.2 percent.
The Aussie is often seen as a liquid proxy of trades related to China, Australia’s major trading partner.