Mario Draghi

The European Central Bank must take into account the weakening of inflation due to the strong euro as it prepares to wind down its unprecedented stimulus program, ECB chief Mario Draghi said on Sept. 7.

The euro jumped more than half a percent after breaking above a key level on Aug. 29 while the dollar fell to a two-year low against the Swiss franc after a North Korean missile test sapped investors' leveraged demand for risky assets.

The euro has hit $1.20 for the first time since January 2015 as the prospect of a US interest rate rise recedes, BBC writes.

Hurricane Harvey's impact has led analysts to assume the US central bank will not want to risk curbing economic growth and fears over North Korea's activities have unnerved investors.

The euro held its gains on Aug. 28 as traders bet that the European Central Bank would start to wind down its crisis-era stimulus program, while lower expectations for further tightening in the United States weighed on the dollar.

Unconventional monetary policy is a success, but gaps in understanding the relatively new tools remain, European Central Bank President Mario Draghisaid on Aug. 23, cautioning against hasty policy responses to the new reality.

European Central Bank governors expressed concern over the strength of the euro at their last meeting in July, minutes showed on Aug. 17, complicating their attempts to ease away from stimulus without undermining the recovery.

Greece's government borrowing costs held near their lowest level since 2010 on Tuesday as the country sought to end a three-year exile from financial markets.

When European Central Bank President Mario Draghi held a scheduled news conference on Thursday, what Greece took away from his comments were words of caution regarding a trial bond issue and that inclusion in the quantitative easing program is not yet on the cards for Athens. The rest of the world, though, was tuning in to a different message.

Eurozone government bonds were in demand on Friday as the cautious stance of policymakers cheered investors, while IMF support for a Greek bailout added to the general mood of goodwill towards the single currency bloc.

The International Monetary Fund's Executive Board was due to approve the organization's participation in the Greek program "in principle" last night but doubts persisted about when Athens might be able to return to the bond markets.