Currency Markets Hold Steady Amid Interest Rate Speculations

The euro held steady near six-week highs against the dollar as investors awaited an expected interest rate cut from the European Central Bank on Thursday. The U.S. dollar, meanwhile, recovered slightly despite renewed concerns over slow economic growth following a contraction in the U.S. services sector and a cooling labor market.

Michael Brown, a senior research strategist at Pepperstone, noted that foreign exchange markets have been trading in relatively tight ranges. "There was dollar softness yesterday after downside surprises in the ISM services data, but slightly calmer heads are prevailing this morning," he said. On Thursday, the dollar gained 0.37% against the yen and 0.25% against the Swiss franc.

Market attention was also on Friday's U.S. payrolls report, which is expected to influence Federal Reserve policy. Economists surveyed by Reuters predict an increase of 130,000 non-farm payrolls for May. The eurozone's economic difficulties, compounded by trade policies from the previous U.S. administration, have led to expectations of a benchmark rate cut by the ECB to support its economy.

(With inputs from agencies.)