The euro was in focus in early trading on Thursday, with the shared currency trading in tight ranges ahead of the monetary-policy decision from the European Central Bank, which could change the short-term outlook. The euro EURUSD -0.02% traded at $1.3764 in European morning hours, slightly higher than the $1.3760 from late Wednesday. Against the pound EURGBP +0.04% , the currency moved around £0.8270, a 0.1% drop from the prior day, according to FactSet. The muted moves came as investors remained on the sidelines ahead of the monthly ECB decision due at 12:45 p.m. in London, or 7:45 a.m. Eastern Time. Most economists expect the central bank to make no changes to rates or policy, but after euro-area inflation dropped to a four-year low in March, pressure has been mounting on the Governing Council to further stimulate the economy. Goldman Sachs economist Sebastian Graves said earlier in the week that he expects a small rate cut, so the ECB could give an impression it is not ignoring the low-inflation environment in the euro zone. The euro largely ignored the weaker-than-expected inflation data out on Monday, suggesting that traders expect no immediate action. But ECB President Mario Draghi has surprised markets before, and a move to loosen monetary policy could change the course of the euro, analysts said. "If there is a move to increase accommodation — a benchmark-rate cut, deposit-rate cut, end to bond sterilization, a new lending program — the market will have to adjust for the slip in market yields, which would see the euro down," said John Kicklighter, chief currency strategist at DailyFX, in a note. While the consensus is for no changes at the meeting on Thursday, analysts speculate the ECB could introduce unconventional easing-measures in coming months, by launching a quantitative-easing program or lowering the deposit rate into negative territory. Both scenarios would add pressure on the euro. In other currency pairs, the dollar continued to rise against the Japanese yen, trading at ¥103.9340 from ¥103.77. Richard Perry, market analyst at Hantec Markets, said in a note that after the dollar broke above the key resistance at ¥103.75, the next key resistance is not until ¥104.83, which was a key high in January. "This leaves the way open for further gains," he said. The ICE dollar index DXY +0.05% , a gauge of the currency's strength against six rivals, was almost unchanged at 80.232, compared with 80.240 late Wednesday. The WSJ dollar index XX:BUXX +0.11% , an alternate gauge that pits the dollar against a wider basket of rivals, rose to 73.54 from 73.51. The next major event for the dollar is the U.S. nonfarm-payrolls report out on Friday, which is expected to show that 200,000 jobs were added to the economy in March. A solid number is seen as being positive for the greenback, because it justifies the Federal Reserve's current bias for tapering and its signals it could start tightening policy in 2015. Higher U.S. yields should boost the dollar. On Thursday, the ISM non-manufacturing report comes out at 10 a.m. Eastern Time. The Brazilian real USDBRL +0.01% last traded at 2.2674 against the dollar, after thecentral bank hiked the Selic benchmark rate to 11% from 10.75%, in a move widely expected by economists. The pound GBPUSD -0.07% climbed to $1.6637 from $1.6624 late Wednesday, while the Australian dollar AUDUSD -0.34% fell to 92.28 U.S. cents from 92.42 U.S. cents. Source: Market Watch
