The euro jumped above $1.25 to a fresh 3-year high after the ECB's first meeting of 2018

Euro jumps above $1.25 after the ECB leaves monetary policy on hold in January.
Single currency climbs almost 1% against the dollar, before sliding a little.
That fall came after President Mario Draghi made clear that he does not expect interest rates to increase during 2018.

The euro jumped above to a three year high against the dollar on Thursday afternoon despite ECB President Mario Draghi's efforts to pause the single currency's recent rally.

The euro hit $1.25 — a high not seen since 2015 — early in a press conference held by Draghi after the ECB left monetary policy unchanged. The euro dropped back below that level after comments from Draghi aimed at pacifying the surging currency.

"Recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability," Draghi said during his post-announcement press conference.

Later, Draghi made it clear that he does not expect the bank to change interest rates in 2018, saying: "Based on today’s data I can see very few chances that interest rates could be raised at all this year."

That comment held back the euro a little, pushing it back below $1.25 by just before 2.30 p.m. GMT, as the chart below illustrates: "Central bankers abhor hype and seldom resemble boxing promoters," David Lamb, head of dealing at FEXCO said in an emailed statement, "but this week the contrast couldn’t be more polarised – with monetary policy leaders on both sides of the Atlantic scrambling to talk down their currencies.

"By reaffirming his commitment to keeping Eurozone interest rates lower for longer, the clear – if undeclared – aim of Mr Draghi’s dovish press conference was to keep the euro in check and prevent a strong single currency from hurting Europe’s export boom."

Away from the euro's rise, the ECB left policy on hold, with a deposit rate of -0.4%, a base interest rate of 0.0%, and a quantitative easing programme of €30 billion per month.

"The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases," the central bank said in a statement.

The bank decided in October to reduce the purchases to €30 billion a month from €60 billion and to extend them at least until September, or longer if necessary.

It is widely expected to announce a further lowering of its monthly purchases at some point in 2018, although when that will be remains unclear.