Details about the ECB's bond-buying scheme are not yet known, but it represents a key ingredient in the bank's overall strategy to counter the euro zone's debt crisis.
ECB President Mario Draghi gave assurance that the ECB has a "fully effective backstop mechanism in place" to implement the plan. No specifics about the scheme were disclosed in his news conference, but the euro gained in anticipation.
Few surprises came in Draghi's news conference after the ECB kept a benchmark interest rate at 0.75 percent.
Draghi said the ECB's decision to undertake bond purchases had eased tensions in the region.
"The markets are rallying ... on the idea that the ECB is standing ready to act if necessary," said Neal Gilbert, currency strategist at GFT in New Jersey.
Draghi also affirmed his commitment to preserving the region's monetary system and currency. He said the " euro is irreversible," and that he remained firmly committed to keeping the "singleness" of monetary policy in the euro zone.
In July, he vowed to do whatever it would take to keep the euro zone's common currency in place, sparking a rally from two-year lows. That has helped ease concerns of a euro-zone breakup.
The euro pulled away from gains of nearly 1 percent on the day after minutes from the US Federal Reserve's September meeting showed broad agreement that more policy stimulus was needed. The bank also talked about adopting numerical thresholds for inflation and unemployment to serve as guideposts on policy.
Last month. the Fed launched open-ended large-scale buying of mortgage bonds to boost the economy.
The trimming of the euro's gains preceded Friday's September US employment report, where economists polled by Reuters expect a modest increase of 113,000 new jobs, with the US unemployment rate edging up to 8.2 percent from 8.1 percent in August.
"I'm not saying it's less important than in prior months, but the open-ended pledge on bond buying may be taking some steam out of the report," said Brian Kim, currency strategist at Royal Bank of Scotland in Stamford, Connecticut. He noted that market reaction could prove muted.
At the close of New York trade, the euro pared its early gains of nearly 1 percent. It stood at $1.3018, up 0.88 percent. It hit a high of $1.3031, its strongest level since Sept. 21. Against the yen, the euro rose 0.88 percent to 102.16 yen , after hitting a two-week peak of 102.18 yen.
ALL EYES ON SPAIN
The chance of Spain asking for a bailout and triggering the ECB's bond-buying plan has made investors wary of selling the euro. At the same time, uncertainty about when Spain is likely to make such a request has limited the currency's gains.
Analysts believed, however, that Spain's budget proposal seemed designed with a bailout request in mind.
Also in focus on Thursday was a debt auction at which Spain raised 4 billion euros ($5.2 billion) selling tranches of bonds maturing in 2014, 2015 and 2017. Yields fell from the previous auction.
The euro rose to a two-week high against the Swiss franc but has since pulled back to break even on the day at 1.2110 . It retreated slightly from a two-week peak against the pound at 80.42 pence.
The pound rose 0.75 percent against the dollar to $1.6195 after the Bank of England kept rates and its quantitative easing total, as expected, on hold.
The BoJ, which only last month boosted its asset-buying program, has been under intense political pressure to offer more monetary stimulus to try to spur growth and weaken the yen.
The BoJ is expected to hold rates unchanged at its Oct. 4-5 meeting in order to gauge the effects of its latest easing. Pressure to ease further was expected to continue ahead of its Oct. 30 policy meeting.
"Given that the BoJ just decided on additional easing at its last meeting two weeks ago (Sept. 18-19), we think it is likely to remain on hold at its 4-5 October policy meeting, unless the yen rises sharply for some reason and leads the MoF to consider intervening in the currency markets," Bank of America Merrill Lynch wrote to clients in a note on Thursday.