The euro jumped to a two-month high against the dollar on Thursday in a move that analysts said could be attributed to one key factor: a scaling back of U.S. rate hike expectations.
The single currency rose more than 1 percent on the day to about $1.1250 – its highest level since late February. It marks a change in course after falling for several months against a broadly robust dollar.
"The euro's strength today is not about what's boosting it but about what's hurting the dollar," Geoffrey Yu, a senior currency strategist at UBS, told CNBC.
"Federal Reserve rate hike expectations have taken a knock and the debate has switched from how many times will the Fed hike rates this year to if the Fed will hike rates this year."
Talk that the Fed could hike rates later rather than sooner was fueled on Wednesday by news that the U.S. economy grew at an annual rate of just 0.2 percent in the first three months of the year. The Fed also downgraded its view of the U.S. labor market and economy following a policy meeting.
