The euro saw moderate strength on Thursday in New York, backing away from recently-seen lows. Traders showed more confidence in the higher-yielding currency amid hopes the European Central Bank won't cut interest rates much further.

The euro was little-changed amid choppy trading with the dollar. The single currency hit a four-day low of 1.3128 before rebounding later in the morning.

The U.S. Department of Labor revealed that initial jobless claims fell to 610,000 for the week ended April 11th, down 53,000 from the previous week's revised figure. The 4-week moving average for initial claims, a statistic that flattens out week-to-week fluctuations in the data, dipped 8,500 to a level of 651,000.

Meanwhile, a Commerce Department report showed that housing starts fell 10.8 percent to an annual rate of 510,000 in March from the revised February estimate of 572,000. Economists had expected starts to slip to 540,000 from the 583,000 originally reported for the previous month.

The European currency climbed slightly away from a seven-week low against the British pound. The euro climbed to 0.8870 after hitting as low as 0.8785 earlier in the week.

The substantial cuts in UK interest rates and more quantitative easing are likely to have a significant impact on demand in the British economy, the Bank of England monetary policy member-designate David Miles said in an interview with the Western Mail newspaper.

The euro recovered its losses against the yen after earlier dipping to a two-week low of 129.35. The currencies moved near 131.00 in the early afternoon.

Data from the Eurostat confirmed euro area annual inflation at 0.6 percent in March, which was the lowest rate since the launch of euro ten years ago. Consumer price inflation eased from February's 1.2 percent and 3.6 percent in the year-ago period.

Wednesday, a Governing Council member of the European Central Bank, Axel Weber said there is still a little room to cut the main refinancing rate, but it should not go below 1 percent. In a speech in Hamburg, Weber said if the interest rate falls below 1 percent, banks will have no incentive to lend to each other, paralyzing interbank lending.

A separate report released Thursday showed that industrial output fell 18.4 percent year-on-year in February after falling a revised 16 percent in January. The decline was slightly quicker than the expected fall of 18 percent. Output was down 2.3 percent month-on-month following a revised 2.4 percent decline in January, while economists had expected a 2.5 percent fall for February.

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