* U.S. dollar gains against euro on Draghi comments
* Euro earlier rose to a 2-1/2 year high against the dollar
* Dollar index rises 0.15 percent
(Adds comments, details from ECB meeting, Yellen testimony;
By Karen Brettell
NEW YORK, May 8 The dollar gained against the
euro on Thursday after European Central Bank President Mario
Draghi said the bank might act to stem falling inflation at its
June meeting, erasing the dollar's earlier fall to a 2-1/2 year
Draghi said that the ECB's governing council is comfortable
with the bank acting in June if price inflation forecasts
Many economists expect a downward revision in the ECB
staff's inflation forecasts, which could open the way for more
stimulus such as an interest rate cut or new liquidity
"They signaled through the press conference that a rate cut
is likely in June. That has capped the move higher in the euro,"
said Martin Schwerdtfeger, a foreign exchange strategist at TD
Securities in Toronto.
The euro was last down 0.34 percent against the
dollar at $1.3864. It earlier rose to $1.3992, the highest since
Draghi also flagged his concerns about the strength of the
euro, which has gained more than 4 percent in the past six
months and has helped ease inflation that is already running at
"He said the currency is a serious concern...a strong
currency is going to be a factor that is going to weigh on
inflation," said Eric Viloria, a currency strategist at Wells
Fargo Securities in New York. "His comments were quite dovish."
The ECB meeting was the main driver of U.S. dollar price
moves on Thursday even as Federal Reserve Chair Janet Yellen
testified on the U.S. economic outlook before the U.S. Senate
Yellen repeated comments from Wednesday indicating that the
Fed was likely to keep benchmark overnight interest rates near
zero for some time given the "considerable degree of slack" in
the U.S. labor market.
She further urged the U.S. Congress on Thursday to address
the nation's long-term budget challenges, warning that the
current course was unsustainable.
The dollar was up 0.24 percent against the Japanese yen
at 101.64. The dollar was down 0.23 percent against the
Swiss franc to trade at 0.8783 francs.
The U.S. dollar index, which measures the dollar
against six major currencies, gained 0.20 percent to 79.36.
(Editing by Peter Galloway)