Dollar Slides Against Majors as ECB Signals Patience on Rate Path

The Bloomberg Dollar Spot Index declined 0.8% on Thursday, its largest one-day drop since July, as traders unwound short euro positions built up ahead of the European Central Bank's policy meeting.

President Christine Lagarde struck a cautious tone in the press conference, noting that disinflation was progressing but warning against reading too much into any single data point. Money markets pulled back their bets on ECB easing, now pricing 55 basis points of cuts by end-2027 versus 78 basis points a week earlier.

The euro climbed to $1.1245, its strongest level since late July. Sterling also advanced, gaining 0.6% against the dollar after UK services inflation printed softer than expected.

"The FX market has been hunting for a reason to fade dollar strength all quarter," said Tomas Herrera, G10 FX strategist at Meridian Markets. "The ECB delivered one, and the Fed's own dovish repricing did the rest."

Asian currencies broadly gained. The Japanese yen strengthened to ¥146.20 per dollar, though it remains close to levels that triggered intervention earlier this year. The Korean won and Singapore dollar both hit multi-month highs.

Commodity currencies outperformed, with the Australian dollar up 0.9% and the Canadian dollar up 0.5%. Copper prices added 1.4%, supported by the weaker dollar and improving Chinese credit data.