NEW YORK (CNNMoney.com) -- The euro recovered from earlier losses Thursday amid speculation that the European Central Bank could intervene in the currency market, following signs the Swiss National Bank is already doing so.
What prices are doing: The dollar was down 1.3% against the euro to trade at $1.2574, after trading near a high of $1.26 earlier in the session.
The dollar was flat versus the British pound to $1.4454. Earlier, it had gained over 1% against the U.K. currency.
Against the Japanese yen, which is considered a safe haven asset, the dollar was down 1.6% at ¥90.22.
What's moving the market: The euro recovered sharply from an earlier sell-off against the dollar as traders rushed to unwind bets against the shared currency following a spike in the Swiss franc.
At around 1 p.m. ET, the Swiss franc jumped over 1% against the euro, suggesting the SNB was selling the shared currency, according to Kathy Lien, head of currency research at trading firm GFT.
The move raised bets the ECB could move to intervene in the currency market, something the central bank has not done since 2000, she said.
"There's a lot of speculation in the markets about intervention," said Lien. "Traders are very short the euro and any hint of intervention can cause sharp rallies."
However, it's unlikely the ECB would intervene in the currency market without first announcing its plans to maximize the impact, she said.
"It serves them no purpose to be subtle," she said, adding that many traders still suspect a stealth intervention.
The dollar had strengthened against the euro earlier in the session as investors flocked to the U.S. currency for safety. Stocks fell sharply due to ongoing fears that the European economy could slip back in to recession.
Earlier this week, Germany's financial regulator banned "naked" short sales of debt securities issued by euro zone countries, as well as the country's ten leading financial companies. The restrictions will apply until March 31, 2011.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.09%||4.03%|
|15 yr fixed||3.25%||3.18%|
|30 yr refi||4.12%||4.07%|
|15 yr refi||3.29%||3.19%|
Today's featured rates:
Shares of several uranium miners are soaring this year on hopes that Donald Trump will commit more investments to nuclear power. But investors need to get careful. The stocks are as volatile as radioactive elements. More
President Trump promised to 'buy American and hire American.' He says his policies will create 25 million new jobs, the most of any U.S. president in history. CNNMoney lays out just how hard that will be. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
If you're smart about when you first claim Social Security, you can increase your benefits and reap the rewards for the rest of your life. More