By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The euro gained back lost ground against the dollar Wednesday, but the greenback pared its losses ahead of Thursday’s European Central Bank meeting.
The euro EURUSD -0.47% rose to $1.4427 from $1.4419 in late North American trading on Tuesday, but down from a session high of $1.4466. See real-time currency quotes and tools.
The euro slumped Tuesday, after Moody’s Investors Service downgraded Portugal’s long-term government bond ratings to Ba2, or junk grade, from Baa1, rekindling fears about Europe’s sovereign-debt situation in the wake of Greece’s own struggle to get its parliament to pass an austerity plan.
“The short covering rally during Asian trade has run out of steam on the European open with traders still wary of holding long [euro] positions in the wake of yesterday’s downgrade,” said Boris Schlossberg, head of currency research at GFT, in a note.
On Thursday, the European Central Bank’s governing board is widely expected to approve a hike in interest rates of 0.25 percentage point.
“The lack of upside impetus” in the euro reflects the fact that an interest-rate hike is “fully priced in, and markets are wary of chasing the euro in case we see a similar ‘buy the rumor, sell the fact’ reaction which characterized last month’s meeting,” said Daragh Maher, foreign-exchange strategist at Credit Agricole.
The dollar index DXY +0.29% , which measures the greenback’s performance against six other currencies, stood at 74.611, compared with 74.661 late Tuesday.
Against the yen, the greenback USDJPY -0.12% slipped to ¥80.81 from ¥81.10 late Tuesday.
The British pound GBPUSD -0.32% fell to $1.6027 from $1.6064.
The Australian dollar AUDUSD +0.03% rose to $1.0715 from $1.0692 late Tuesday.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
