By Josie Cox The euro continued to fall against the U.S. dollar Friday, hitting a near two-week low a day after the European Central Bank offered strong signals that it is preparing to ease monetary policy as early as next month. By midmorning, the euro was down around 0.2% on the day, at $1.3809 against the dollar, having plunged from an almost 2.5-year high Thursday when ECB President Mario Draghi said he would be open to taking further measures to support the euro-zone economy after the central bank's staff projections are known in June. The ECB left interest rates on hold Thursday. "The lower euro levels are justified from a fundamental point of view, as the ECB has kept the door open for a rate cut in June," said Lutz Karpowitz, a currency strategist at Commerzbank AG. Even so, the change in tack from Mr. Draghi is confusing for market participants, meaning the weakening of the euro may not be sustained, he added. Scott Thiel, head of European and global bonds at BlackRock, said he interpreted Draghi's "unusual communication strategy as a signal for an interest-rate cut, perhaps even a negative deposit rate, but not suggestive of quantitative easing because the ECB remains unconvinced of broad deflationary risks". Others, however, struck a more cautious note, warning that action isn't a foregone conclusion. "I'm still not convinced that we will see action in June," said Aurelija Augulyte, strategist at Nordea. "The ECB might be keen to save their bullets for when they really need them--for when volatility is heightened, when there is a gross move in interest rates or a drastic fall in stocks." Further burdening the euro Friday were data that showed German exports declined in March and the country's trade surplus was smaller than expected, adding to a series of weaker economic indicators for the month. Exports from the country fell 1.8% on the month, while imports declined 0.9% from February, the Federal Statistics Office's data showed. Elsewhere Friday, data showed that British factory output grew at its fastest pace for a calendar quarter in nearly 15 years during the first three months of 2014. Output grew 1.4%, up from 0.9% growth in the three months to February. Sterling, however, traded largely unchanged on the news, flat against the dollar at $1.6929. The Bank of England Thursday also left monetary policy unchanged as widely expected. European equities slipped slightly after Thursday's surge to six-year highs. The Stoxx 600 Europe was down 0.4% by midmorning, with the U.K'sFTSE 100 and Germany's DAX also down 0.4%. France's CAC-40 was down 0.6%. In the U.S., stock futures indicated a 0.2% loss on the open. Changes in futures don't necessarily predict market moves after the opening bell. One of the biggest gainers on the day in Europe was Franco-American network-equipment company Alcatel-Lucent SA after it announced it had narrowed its loss in the first quarter by reducing costs and boosting growth at its Internet- routing division. Telefónica was one of the biggest losers, after reporting first-quarter net profit fell 23%, hit by exchange rate turmoil in Latin America and falling revenue in Spain and Germany. In commodities markets, gold rose 0.1% to $1,288.40 an ounce, while Brent crude oil gained 0.7% to trade at $108.76 a barrel.

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