2014.06.0605:12:14UTC+00Euro stabilizes on ECB policy move

The euro firmed early on Friday, carrying a dramatic rally from a four-month trough, as investors locked in profits following the European Central Bank alleviated policy in a long expected move.

As of last checking, the common currency was at $1.3662, following it rose 0.5% Thursday. Momentum could see it test resistance at $1.3688/90 before the US non-farm payrolls due today.

The euro initially fell $1.3503 following the ECB trimmed interest rates to record lows, putting its deposit rate into negative setting for the first time. It also initiated a series of measure to yield money into the dragging eurozone economy.

However, the market, which had expected ECB's action for the longest time, was quick to book gains in a move that caused a squeeze on short positions. That saw the currency move back to a $1.3670 high.

"For the euro, it was the usual 'buy the rumor, sell the fact' story. The risk on market the ECB created was dollar negative across the board, allowing not just the euro, but also the New Zealand and Australian dollars to end higher in New York," said Emma Lawson, Strategist at National Australia Bank.

The kiwi was among the best performing major currencies, surging 1% to $0.8515. Aussie escalated 

0.7% to a three-week peak of $0.9347.