Investing.com - The euro was steady near a two-year trough against the dollar on Thursday as markets awaited the European Central Bank’s policy announcement later in the day, amid mounting expectations that it will have to ease policy further.
EUR/USD was last up 0.16% to 1.2639, holding above Tuesday’s two-year trough of 1.2570.
The single currency remained under pressure after data on Wednesday showed that factory activity in the euro area fell to a 14-month low in September, led lower by a slowdown in Germany and France.
Figures showed that Germany’s manufacturing sector, the euro zone’s largest, slid into contraction territory for the first time in 14 months last month.
Earlier in the week, data showed that the annual rate of euro area inflation slumped to a five year low of 0.3% in September.
The weak data added to pressure on the ECB to implement additional stimulus measures to stave off the threat of deflation and shore up growth in the region.
The bank was expected to keep monetary policy unchanged on Thursday after unexpectedly cutting rates to record lows across the euro zone in September.
The single currency was steady near one month lows against the firmer yen, with EUR/JPY at 137.36, after falling as low as 136.94 earlier.
Demand for the safe haven yen was boosted after a slew of disappointing global manufacturing reports from the U.S., the euro zone and China on Wednesday knocked market sentiment.
Concerns over unrest in Hong Kong and a confirmed Ebola diagnosis in the U.S. also contributed to the risk-off mood.
Investors were also cautious ahead of Friday’s U.S. nonfarm payrolls report, which was expected to show that the economy added more than 200,000 jobs for a sixth successive month in August.
A report by payroll processor ADP on Wednesday showed that the U.S. private sector added 213,000 jobs last month, slightly ahead of expectations for jobs growth of 210,000.
Elsewhere, USD/JPY was down 0.20% to 108.66, retreating from the previous sessions six year peaks of 110.07.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, slid 0.17% to 85.85, off Tuesday’s peaks of 86.34, a high last seen in June 2010.