Euro advances after ECB's Lagarde says exchange rate not being targeted

The euro rose to a one-week high against the dollar on Thursday, after European Central Bank President Christine Lagarde said that while the ECB is watching the exchange rate, it is not a monetary policy tool.

Her comment suggested the ECB was unlikely to undertake measures to weaken the euro despite its recent gains, giving traders motivation to take the single euro zone currency higher.

As expected, the ECB held interest rates steady on Thursday.

The euro rose as high as $1.1917, a one-week peak, and was last up 0.2% at $1.1825. The euros high this year is $1.2014, with the currency surging roughly 6% so far this year.

But a strong euro tends to hurt an export-dependent economy like the euro zone, raising concerns from some ECB officials such as chief economist Philip Lane, who said the exchange rate mattered to monetary policy.

“We do not target the exchange rate,” Lagarde said during a news conference, adding that the central bank was monitoring it.