European Central Bank (ECB) head Mario Draghi opened the door for further stimulus today, saying staff are preparing the technical groundwork for support measures if needed for the struggling economy.

Stocks rallied and the euro slumped on the news.

The ECB did not announce further monetary support after its governing council meeting today, at which it left its key interest rate at a record low of 0.05%.

Mr Draghi’s comments on the preparations for more measures sent markets soaring and weighed on the euro. Central bank stimulus measures can weigh on a currency.

The euro fell to 1.2394 US dollars (£0.7793) from 1.2520 US dollars (£0.7872) before Mr Draghi started speaking.

It is the first time it has traded below 1.24 US dollars (£0.77) since August 2012 when Mr Draghi famously promised to do “whatever it takes” to save the euro.

Stock markets rallied, with Germany’s DAX up 1.6%.

Mr Draghi has said the ECB could engage in further unconventional measures, such as large-scale bond purchases to pump newly-created money into the economy, if the economic situation worsens.

But the ECB has held off, in part because of scepticism about the measure in Germany, the eurozone’s largest and most influential member.

The ECB also wants to give an opportunity to measures it is already deploying to have an effect.

The bank has slashed its benchmark interest rate, offered cheap loans to banks and started purchasing bonds backed by bank loans. All are steps aimed at easing credit to companies.