ECB optimism sees euro hold steady

Early trade in Asia on Tuesday saw the euro remain steady as optimism remained that the ECB will announce plans to tackle the bloc’s debt crisis at its meeting on Thursday.

The currency’s resilience came even though ratings agency Moody’s changed its European Union Aaa rating to negative, warning that it might downgrade the EU if it opts to cut the ratings of the bloc’s four most powerful budget backers: the UK, Germany, France and the Netherlands.

The euro was last at $1.2584 in Asian trading, climbing from $1.2571 in yesterday’s late European trade. Meanwhile markets in the US were shut on Monday for a public holiday. The single currency also sat not too far from its eight-week peak of $1.2638 from last Friday.

Traders said that Moody’s decision to change the outlook to negative was widely expected and that speculation was rife that the ECB will finally announce plans to carry out a debt-buying scheme in order to ease the financial strain on struggling countries like Spain and Italy.

The common currency stood near a two-month peak versus the Australian dollar at A$1.2307, although remained fairly constant against the yen at 98.52. The dollar index also fell to close to a three-and-a-half month low of 80.964.