Investing.com - The euro moved higher against the dollar and the yen following early falls on Thursday, boosted by a spike in German bund yields a day after European Central Bank President Mario Draghi said that investors should get used to higher debt market volatility.
EUR/USD was up 0.67% to 1.1349, the most since May 18, rebounding from session lows of 1.1232.
German 10-year bund yields jumped to their highest level since September, narrowing the gap with their U.S. counterparts.
German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar. Yields rise as prices fall.
Speaking after the ECB voted to keep interest rates on hold at a record low on Wednesday Mario Draghi said markets should get used to periods of higher volatility in European bond markets, which he said won’t affect monetary policy decisions.
The ECB also revised up its inflation forecast for this year to 0.3% from zero previously and said that inflation rates were expected to pick up further during 2016 and 2017.
The revision came after the latest inflation data on Tuesday showed that euro zone consumer prices rose for the first time in six months in May.
The euro weakened earlier in the session as jitters over the prospects of a Greek default weighed.
Talks between Greek Prime Minister Alexis Tsipras and European Commission President Jean-Claude Juncker in Brussels late Wednesday ended without an agreement to unlock more financial aid before the country runs out of money.
However the two sides were said to be close to a deal and were expected to hold further talks on Friday.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday and its bailout program is set to expire later this month.
The euro rose to fresh five-month highs against the yen, with EUR/JPY up 0.44% to 140.69, after falling to lows of 139.56 earlier.
The dollar slipped lower against the yen, with USD/JPY easing to 124.04, off Tuesday’s 12-and-a-half year peaks of 125.05.
Data on Wednesday showed that the U.S. private sector added 201,000 jobs last month, slightly ahead of expectations for 200,000 indicating that the recovery in the labor market is on track.
Investors were looking ahead to Friday’s government jobs report for further indications of the strength of the recovery.
The U.S. was to release data on initial jobless claims later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.47% to two-week lows of 94.90 pressured by the stronger euro.