Euro languishes near 5-week low against dollar

The euro languished against the dollar near five-week lows after coming under more pressure as markets get more certain that the European Central Bank will relax policy next month.

Euro has dropped about 2% since European Central Bank President Mario Draghi said Thursday the bank was all set to take measures next month to expand the euro zone economy if upgraded inflation forecasts warrant it.

The euro's latest drop was triggered by a report that said Bundesbank was prepared to support a number of stimulus steps from the European Central Bank next month, which include purchases of packaged bank loans and a negative rate of return on bank deposits if required in order to have inflation from remaining too low.

The euro might return the top of its recent range if the European Central Bank stays away from any further monetary stimulus in June.

Analysts say that the position for sterling depends on UK employment data and the Bank of England inflation report. The Bank of England report could provide some confirmation of for gradual tightening starting early next year.

The dollar has been supported against a basket of major currencies by the recent pressure against the euro.