European Central Bank chief Mario Draghi said Tuesday that the institution "doesn't target the exchange rate," shrugging off an allegation of currency manipulation from US President Donald Trump.

"We have our remit. We have our mandate. Our mandate is price stability" or inflation just below two percent, Draghi told a central banking conference in Sintra, Portugal.

"We are ready to use all the instruments that are necessary to fulfil this mandate, and we don't target the exchange rate," he added.

Draghi's statement that weak economic growth and sluggish inflation could prompt the ECB to slash further rates already at historic lows had earlier sparked Trump's ire.

"Mario Draghi just announced more stimulus could come, which immediately dropped the Euro against the Dollar, making it unfairly easier for them to compete against the USA," Trump said on Twitter.

"They have been getting away with this for years, along with China and others," he added.

Draghi said in a speech that "further cuts in policy interest rates... remain part of our tools" as the bank looks to juice growth and inflation.

Eurozone policymakers had already discussed potential rate cuts in early June, but Draghi's latest remarks were the first to catch markets' full attention.

That was in part because he said the central bank was ready to move "in the absence of improvement" rather than if economic conditions worsen, lowering the threshold for action.

But Trump later in the day continued to imply that the ECB was somehow looking to gain an advantage, rather than responding to economic conditions in the euro area.

"I want to be given a level playing field and so far I haven't been," Trump told reporters at the White House. 

Trump, who has been pressuring the Federal Reserve to cut rates to boost the US economy, called Draghi's signal "very dramatic."

Global markets were certainly happy about it.

Germany's DAX index of blue-chip shares leapt into the black from negative territory -adding 2 percent - and pushed the euro down as much as 0.3 percent against the dollar, to $1.12, before rebounding slightly. Stocks in London, Paris and New York also posted healthy gains.