The euro hit its highest level in roughly six months against the U.S. dollar on Thursday as traders looked beyond the French elections to the potential for the European Central Bank to signal further reduction in bond-buying, while the greenback was steady against the yen.
The euro jumped to $1.0953, its highest since Nov. 10, 2016 as investors looked to a more hawkish ECB in June after centrist Emmanuel Macron consolidated his position to win France's presidential race in a Wednesday TV debate with anti-EU candidate Marine Le Pen, which removed an element on uncertainty for the euro.
Capital markets professionals have begun looking beyond the ECB's imminent 20 billion euro monthly reduction in bond-buying to a new environment without stimulus for several weeks, but the assumption that Macron would win sharpened traders' focus on higher European yields and a stronger euro as the results of a less stimulative ECB.
"Everybody's still waiting for Draghi to mention a potential tapering timetable," said Dean Popplewell, chief currency strategist at Oanda in Toronto.
The dollar was little changed against the safe-haven yen after touching a nearly seven-week high of 113.04 yen earlier in the U.S. trading session.
Traders said expectations for two more interest rate increases from the Federal Reserve this year after the central bank's Wednesday policy statement kept the dollar strong against the Japanese currency.
Analysts have also said the closure of Tokyo markets for Golden Week holidays was reducing liquidity and helping the dollar remain buoyant against the yen.
The Fed statement "pretty much left the door open to a hike in June," said Mazen Issa, senior FX strategist, at TD Securities in New York. "The more interesting dynamic was whats happening for expectations further out beyond June."
Commodity-linked currencies such as the Australian and New Zealand dollars fell as oil prices tumbled. The Aussie hit a nearly four-month low of $0.7383, while the kiwi hit its lowest since June 2016 of $0.6840 as Brent crude oil prices hit their lowest since Nov. 2016.
The dollar index, which measures the greenback against a basket of six major rivals, was last down 0.12 percent at 98.67.