Forexpros – The euro remained lower against the U.S. dollar in subdued trade on Wednesday, as investors awaited the outcome of the European Central Bank’s policy-setting meeting on Thursday, amid growing expectations for fresh easing measures.
EUR/USD hit 1.2556 during European afternoon trade, the daily low; the pair subsequently consolidated at 1.2566, shedding 0.33%.
The pair was likely to find support at 1.2495, the low of May 25 and resistance at 1.2663, the high of June 16.
The ECB was widely expected to announce an interest rate cut to 0.75% from the current record low 1.00% to help bolster growth in the region, following a recent string of weak economic data.
The euro came under pressure earlier, after the final reading of the euro zone services purchasing managers’ index came in at 47.1 in June, slightly above the preliminary estimate of 46.8, but holding below the 50 level which separates contraction from growth for the fifth consecutive month.
A separate report showed that retail sales in the euro zone rose by a seasonally adjusted 0.6% in May, beating expectations for a 0.3% gain, but total sales for April were revised down to a 1.4% drop from a previously reported decline of 1%.
Meanwhile, markets were also eyeing Friday’s U.S. nonfarm payrolls report, amid speculation that the Federal Reserve could implement a third round of quantitative easing to shore up the economy, which has been hit by the ongoing crisis in the euro zone.
Elsewhere, the euro was steady against the pound with EUR/GBP easing 0.02%, to hit 0.8034.
Also Wednesday, data showed that service sector activity in the U.K. expanded at the slowest rate in eight months in June, fuelling expectations for a fresh round of quantitative easing from the BoE at its meeting on Thursday.
The Markit/CIPS Services PMI fell to 51.3 in June from a reading of 53.3 in May, missing expectations for a decline to 53.0.
Trade volumes were expected to remain light as markets in the U.S. closed for the Independence Day holiday.
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