The single currency rose 0.4 per cent to $1.3036 while Britain's pound, which had hit a 2-1/2 year low below $1.50, rose to $1.5050. European shares gave up gains of around 0.3 per cent to be little changed, while US stock index futures pointed to another strong day on Thursday.
Both central bank decisions had been widely forecast, but some in the markets had seen a chance rates would be cut given recent weak economic data so there was some relief after the announcements. Traders said the euro remains vulnerable to selling if, as expected, the ECB President Mario Draghi signals at a news conference which began at 1330 GMT that a future cut is likely.
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The ECB has singled out the uneven transmission of its record-low interest rates across the currency bloc as its main problem at the moment so the market will be closely watching for any hint on how Draghi plans to address this dilemma.
The central bank will also unveil the latest staff economic projections, seen little changed from previous forecasts published in December, which predicted 2013 would be a year of contraction. Meanwhile in the bond market, Spanish and Italian bond yields were lower though this was linked to Madrid's successful sale of five billion euros ($6.5 billion) in new debt earlier.
The sale produced lower yields than a similar sale two weeks ago, easing concerns about the impact of the political deadlock in Italy and showing the ECB's promise to support struggling countries continued to underpin demand. Ten-year Spanish government bond yields fell 7.1 basis points after the sale to 4.96 per cent and equivalent Italian yields were 4.1 bps lower at 4.63 per cent.
German bond futures stuck to tight ranges, with investors showing little reaction to the ECB's monetary policy decision. The main Bund futures contract was up 8 ticks on the day at 145.20. Commodity markets were mostly steady ahead of the news conference by the ECB president, with Brent crude down 49 cents at $110.58 a barrel.
U.S. crude rose 34 cents to $90.77. In Europe's equity markets the pan-European FTSEurofirst 300 index gained about 0.2 percent to 1,188.6 points, close to its 4-1/2 year intraday high of 1,193.35 points hit on Wednesday. Frankfurt's DAX, London's FTSE 100 and Paris's CAC-40 were between 0.1 and 0.4 percent higher.
U.S. DRIVER The prospect of future looser policy from the two major world central banks, along with signs Japan is about to step up aggressive monetary easing, is contrasting with a change in the outlook for the U.S. Federal Reserve, giving the dollar a boost. "The Fed is still pumping in $85 billion a month at the moment," said Daragh Maher, currency strategist at HSBC. "But the latest data has forced the idea that the U.S. economy is improving and therefore, going forward, the direction of policy could change." The dollar hovered near its highest level in 6-1/2 months against a basket of major at 82.42, having risen as high as 82.60, its highest since Aug. 20, in late Wednesday trade. It has rallied more than 4 percent from this year's low of 78.92 plumbed on Feb. 1. Investors have been revising their outlook for U.S. growth after a report showed private sector employers are hiring at a faster rate than expected, pointing to lower unemployment, a key condition for the Fed to wind up its massive stimulus programme. The jobs growth, which followed similarly strong reads on housing and the services sector activity, has also bolstered hopes that Friday's key non-farm payrolls data will surprise on the upside and offset fears that government spending cuts and tax rises would damage the recovery. Despite weak economic performances in Europe, the UK and Japan, the better outlook for the United States is maintaining support for stocks, leaving the MSCI world equity index little changed on the day ahead of the U.S. open but close to its best levels since mid-2008. American markets have also been drawing support from signs that Congress is about to pass a measure to keep funding the government until the end of September, easing the prospect of an immediate fiscal crisis.