The euro held steady against the dollar in Asian trade on Thursday amid speculation that the European Central Bank (ECB) will cut interest rates after a policy meeting later in the day.
The common currency bought $1.2530 and 100.04 yen in Tokyo afternoon trade, hardly changed from $1.2527 and 99.97 yen in London on Wednesday afternoon.
The dollar was quoted at 79.82 yen, up from 79.80 yen in London.
US markets were closed Wednesday for the Independence Day holiday.
There was widespread speculation that the ECB would cut interest rates by a quarter of a percentage point, said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.
However markets have largely factored in the expected cut so the “reaction may be limited,” she added.
Analysts have predicted the ECB would chop already record low interest rates from 1.0 percent to 0.75 percent, building on measures agreed last week by European Union leaders to tackle the eurozone debt crisis.
On Thursday, Bank of Japan governor Masaaki Shirakawa repeated a pledge to ensure the stability of the nation’s financial system, as global markets remained under pressure from the eurozone’s fiscal woes.
Shirakawa said “careful attention should be paid to the risk that the problems may have on Japan through movements in financial markets”.
Officials have previously warned that the situation in Europe, a key market for Japanese products, was a major threat to Japan’s economic recovery.
Fears about Europe and a lumbering US economic recovery have pushed up the value of the yen as traders eye safe-haven currencies, putting pressure on Japan’s exporters.
The dollar was mixed against other Asia-Pacific currencies.
The greenback firmed to Sg$1.2663 from Sg$1.2630 on Wednesday, to 1,135.80 South Korean won from 1,135.50 won, and to 31.51 Thai baht from 31.40 baht.
The dollar also rose to 54.82 Indian rupees from 54.52 rupees, to Tw$29.86 from Tw$29.82, and to 9,381.00 Indonesian rupiah from 9,365.00 rupiah.
The greenback slipped to 41.67 Philippine pesos from 41.75 pesos while the Australian dollar eased to US$1.0258 from US$1.0290. The Chinese yuan also edged down to 12.53 yen from 12.56 yen.
