Euro gains on dollar as ECB presser eyed

The euro edged higher against the U.S. dollar as the markets watched out for the European Central Bank to announce a policy stimulus measure amid a fair degree of skepticism.

The ICE dollar index DXY -.00% , which measures the greenback against a basket of six major global currencies, dropped to 82.868 from 83.07 in North America late on Wednesday.

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Fed gives stronger signals of action

The Fed signaled more strongly it will take action as needed to boost the economy but held back from immediately starting a new round of bond buying or taking other steps.

The WSJ dollar index XX:BUXX -.00% , which gauges the greenback moves against some of the other heavily traded currencies, fell to 71.59 from 71.74.

The euro EURUSD +0.00% was changing hands at $1.2341, compared with $1.2232 in New York trade, where it lost ground after the Federal Reserve kept its low interest rate unchanged, and decided not to take any action.

The ECB and Bank of England both left key interest rates unchanged at policy meetings. A news conference with ECB President Mario Draghi will begin shortly and be closely watched for any stimulus moves to help battle the sovereign-debt crisis.

Scope for disappointment

A report in a German newspaper suggested that the ECB is mulling a two-pronged bond-buying plan with the European Stability Mechanism, which helped shore up the euro and European stocks. ECB weiging two-pronged bond-buying plan: report

But analysts said scope for disappointment remains large.

“Expectations for aggressive policy moves from the ECB were certainly elevated, but given the stance of the Germans over the last couple of days, some of the fast money has exited risk assets, as traders come to terms that inaction by Mario Draghi and his team will cause a sharp sell down in equities, commodities and risk forex,” said Chris Weston, an institutional dealer at IG Markets.

Societe Generale, meanwhile, found in a survey of clients that 69% of those polled think the ECB will disappoint after its meeting Thursday. Among those surveyed, 50% of the banks, 68% of the hedge funds, 71% of asset managers and all corporate clients said they the ECB won’t meet expectations.

Among other major currency pairs, the dollar USDJPY -.00%  was trading at ¥78.25 against the Japanese unit, compared with ¥78.43 seen late the prior session.

The British pound GBPUSD +0.00%  was changing hands for $1.5615 from $1.5552, while the Australian dollar AUDUSD +0.00%  was buying $1.0481, compared with $1.0466.