The Wall Street Journal reports: ''the euro fell Thursday despite the European Central Bank's decision to leave all its benchmark interest rates on hold, confounding some investors' expectations for a rate cut''.
The common currency surged to $1.3540 against the dollar from $1.3510 shortly before the announcement, before falling again to $1.3489.
A growing number of banks and economists had tipped a rate cut over the past few days after data released Friday showed annual inflation rate slipping to 0.7% last month, matching October's recent low. The October number had prompted the ECB to cut its main lending rate in November to 0.25%.
"Unchanged rates seemed to prompt some short covering from investors speculating on a cut. It was however just a minority expecting a cut so the move was not extended," said Josh O'Byrne, currencies strategist at Citigroup
