The rupee slipped to 55.03/04 from its 54.48/49 close on Wednesday in choppy trade as dealers await the ECB rate decision due at 1145 GMT, where it is widely expected to cut rates. The euro steadied versus the dollar but looked vulnerable to selling as market players brace for the widely expected interest rate cut.
Analysts sharply lowered their bearish bets on the rupee due to mounting hopes for reforms since Prime Minister Manmohan Singh temporarily took over the running of the finance ministry, a Reuters positioning poll showed.
