The European Central Bank (ECB) left its monetary policy on hold on Thursday but the euro traded sharply higher after ECB President Mario Draghi said he was more confident the central bank would reach its inflation target.
As widely expected, the ECB kept interest rates and guidance unchanged at its policy meeting, with investors focusing on comments from ECB President Mario Draghi in a subsequent press conference.
Draghi said strong eurozone data had "strengthened further our confidence that inflation will converge to our inflation aim of below or close to 2%."
The euro was around 0.8% higher against the US dollar as at 1410 GMT.
Investors remain sensitive to any indication from Draghi that the ECB could hike interest rates during 2018.
In the autumn, the ECB was seen to be adopting a dovish posture when it announced it would continue asset purchases in 2018, though at a reduced rate of €30bn per month compared with €60bn previously.
However, the euro has continued to make gains against the US dollar as continued strength in eurozone domestic economic data has prompted speculation that the ECB could adopt a more hawkish stance this year.
The euro has risen by around 5% against the dollar since the beginning of the year, having already climbed 14% against the dollar during 2017.