The euro briefly edged up against the dollar on Thursday after the European Central Bank president said strong vigilance was needed to stem inflation risks, signaling a possible September rate hike.

The ECB earlier kept rates on hold at 4.0 percent as expected.

The 'strong vigilance' remark hinted at a September rate hike move instead of October, said David Powell, senior currency strategist, at IDEAglobal in New York.

However that has been largely in line with expectations and so the euro hasn't really moved that much, he added.

In a press briefing, Jean-Claude Trichet said the ECB was watching volatile markets closely and added that recent trading action was part of a normalization of pricing risk.

The euro rose to $1.3675 from about $1.3661 before the release of Trichet's remarks. However, the euro came back to its pre-Trichet level, trading slightly down at $1.3654.

European union Inflation