The euro gained on Thursday after the European Central Bank left rates unchanged, as expected, but warned on energy-cost inflation risks, reinforcing bets for a December hike.

ECB policymakers are expected to hike rates in December before pausing as higher bond yields weigh on growth, sources told Reuters.

ECB President Christine Lagarde resigned and will step down on February 7.

The dollar was pressured by softer Treasury yields, lower oil prices amid peace-talk hopes, and Nasdaq weakness driven by AI spending concerns.

Yields fell despite US PCE inflation accelerating in September to 3.6% annualized, Q3 GDP beating forecasts and new jobless claims hovering near 57-year lows.

In geopolitics, Russian President Vladimir Putin supports restoring ties with Europe but is prepared for war if tensions escalate, though it wants to avoid conflict.

President Volodymyr Zelenskiy said Ukraine has intelligence that Russia is planning new ballistic missile strikes and needs the means to counter them.

In a hopeful sign of improving relations, President Donald Trump, who has been engaged in a tariff war with Canada, told a rally that Canada has been "treating us extremely nicely recently".

His comments followed European Commission President Ursula von der Leyen saying that the EU and Canada are continuing talks on Canada becoming the bloc's first associate member.

Sweden's parliament speaker said he has decided lawmakers will vote on Centre Party leader Elisabeth Thand Ringqvist as prime minister although she has said earlier she has not been able to secure a majority.

The dollar was mostly lower, with large futures block trades pointing to month-end repositioning.

The pound and Swedish krona outperformed their G10 peers ahead of expected rate hikes by the Bank of England and Riksbank next week.

EUR/USD rebounded from a 17-month low at 1.1105 to 1.1173 as softer US yields offset the ECB hold, with scope for a short squeeze while support at 1.1105 holds.

GBP/USD climbed toward its 100-DMA at 1.3388, supported by BOE hike expectations and the UK's rate advantage, with the 50% retracement at 1.3406 in focus.

USD/JPY remained rangebound around 158 ahead of the BOJ, with nearby support at the 55-DMA of 157.62 and resistance at 158.44 cloud top and 158.55 200-DMA, with intervention risks likely to intensify on gains.

AUD/USD fell as risk assets and metals weakened, leaving techs mixed above the 0.70 level and below its 55- and 200-DMAs as a falling RSI weighs.

Treasury yields fell 4 to 8 basis points as the curve steepened. The 2s-10s curve was up about 1 basis point to +33.0bp.

The S&P 500 slipped 0.54% as a drop in tech shares weighed.

WTI oil fell 0.68%, paring a steeper loss.

Gold slid 1.3% toward $4000/oz and copper dropped just over 1%.

Heading toward the close: EUR/USD +0.08%, USD/JPY +0.06%, GBP/USD +0.25%, AUD/USD -0.34%, DXY -0.16%, EUR/JPY +0.15%, GBP/JPY +0.35%, AUD/JPY -0.26%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)