Euro drops to four-month lows on dovish Draghi comments

NEW YORK (Reuters) - The euro fell to a four-month low against the U.S. dollar on Thursday and the U.S. dollar index rose to a seven-month high after the European Central Bank kept the door open to more stimulus in December.

ECB President Mario Draghi left a wide range of options on the table and emphasized that a long-awaited rise in inflation is predicated on "very substantial" monetary accommodation.

The discussion firmly shot down any talk of tapering its 1.7 trillion euro ($1.9 trillion) asset-buying program.

"Draghi pushed back strongly against the idea that they could discuss tapering or adjusting QE and that weighed on the euro," said Vassili Serebriakov, FX strategist at Credit Agricole in New York.

"The markets took (Draghi's comments) as a little bit dovish," he said.

Bloomberg had reported earlier this month that ECB policymakers were building consensus that quantitative easing would need to be wound down gradually when the central bank decides to end the program.

The euro dropped 0.45 percent against the U.S. dollar to $1.0925, after earlier falling as low as $1.0916, the lowest since June 24.

The dollar index against a basket of six major currencies <.dxy>, which has a large euro component, jumped to a high of 98.318, after earlier rising as high as 98.404 the highest since March 10.

The greenback was also supported by relatively hawkish comments by New York Fed President William Dudley late on Wednesday.

Dudley, a permanent voter on policy and a close ally of Fed Chair Janet Yellen, said that the U.S. central bank will likely raise interest rates later this year if the U.S. economy remains on track.

U.S. data on Thursday showed that U.S. home resales surged in September after two straight months of declines as first-time buyers stepped into the market, pointing to underlying momentum in the economy.

(This version of the story corrects euro to dollar conversion in paragraph 3)

(Editing by Nick Zieminski and Lisa Shumaker)