The U.S. dollar fell against its major opponents in early European trading on Thursday, amid expectations that the Federal Reverse might raise interest rates at a slower pace this year, in the light of slowing growth in the U.S., as well as deteriorating prospectus over global growth outlook.

In an interview with MNI on Wednesday, Federal Reserve Bank of New York President William Dudley warned that the deteriorating outlook about the global growth and additional dollar strength could have "significant consequences" for the health of the world's largest economy.

Dudley stated that the Fed would consider persistent tightening of financial conditions very seriously while pursuing its planned interest rate hikes.

Weak service sector data released yesterday added to worries about U.S. economic growth, with expectations for a rate hike in March almost nil.

Data from the Institute for Supply Management showed that its non-manufacturing index dropped to 53.5 in January from an upwardly revised 55.8 in December. Economists had expected the index to inch up to 55.5.

Investors await jobless claims and factory orders figures, due later in the day, for fresh clues on the outlook for Fed policy.

Attention also shift towards Friday's jobs data, which is forecast to show that nonfarm payrolls may have risen 190,000 in January, down from December's robust gain of 292,000.

The greenback showed mixed performance in Asian trading. While the greenback held steady against the franc and the yen, it rose slightly against the euro and the pound.

In European trading now, the greenback dropped to 1.1184 against the euro for the first time since October 22, 2015. This marks almost a 1 percent decline from a high of 1.1070 hit at 2:00 am ET. Continuation of the greenback's downtrend may take it to a support around the 1.13 zone.

The European Central Bank President Mario Draghi said that adopting a wait-and-watch attitude and acting too late on prolonged low inflation is riskier than taking early measures as the former approach could erode confidence.

In a lecture delivered at the Bundesbank, Draghi said, "Adopting a wait-and-see attitude and extending the policy horizon brings with it risks: namely a lasting de-anchoring of expectations leading to persistently weaker inflation."

Extending early slide, the greenback weakened to 1.3666 against the loonie, its lowest since December 11, 2015. The greenback is poised to test support around the 1.36 region.

The greenback fell to more than 4-week lows of 0.6721 against the kiwi and 1.4665 against the pound, from its early highs of 1.6641 and 1.4563, respectively. On the downside, the greenback may challenge support around 0.68 against the kiwi and 1.48 against the pound.

The greenback edged down to 117.34 against the yen and 1.0008 against the franc, pulling away from its prior highs of 118.24 and 1.0074, respectively. The greenback is seen finding support around 116.00 against the yen and 0.99 against the franc.

Looking ahead, the Bank of England is due to announce its interest rate decision, inflation report and the minutes of the meeting at 7:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.50 percent and asset purchase target at GBP 375 billion.

At 7:45 am ET, Bank of England Governor Mark Carney, along with the other MPC members, will hold a press conference on the Inflation Report in London.

Federal Reserve Bank of Dallas President Robert Kaplan is due to participate in a discussion of Global Economic Conditions at an event hosted by the Real Estate Council in Dallas at 8:30 am ET.

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