FOREX-Euro holds firm as all eyes on possible ECB steps

* Euro up 0.3 pct at $1.3187 (EUR=: )

* Euro gets boost after Spanish, French bond auction results

* Markets hope ECB will expand bond purchase programme

* Disappointment could see euro head back below $1.30

(Adds quotes, updates prices)

By Tamawa Desai

LONDON, Dec 2 (BestGrowthStock) – The euro held firm on Thursday
after rising the previous day as investors waited to see if the
European Central Bank would take more steps to calm euro debt
concerns, but could fall again if the central bank disappoints.

The euro posted its biggest one-day rise in more than a
month on Wednesday on speculation the ECB would massively step
up its bond purchases, after the single currency struck 11-week
lows against the dollar.

All eyes were on the ECB, which is expected to keep
unlimited liquidity operations in place for longer
[ID:nLDE6B01V3] but hold off from more radical measures
[ID:nLDE6B00SW].

The ECB will announce the outcome of its policy meeting at
1245 GMT, followed by ECB President Jean-Claude Trichet’s news
conference at 1330 GMT.

“The focus is on whether Trichet will announce a numerical
target for bond purchases. If he keeps to saying they are ready
to buy more bonds but without a numerical target, the markets
will be disappointed and turn negative on the euro,” said
Roberto Mialich, currency strategist at Unicredit in Milan.

Furthermore, traders may take advantage of such a situation
to dump euro/dollar long positions ahead of key U.S. payroll
data due out on Friday.

“The (U.S.) ADP numbers raised expectations Friday’s jobs
report will not be so bad, making players adverse to holding
excessive euro/dollar longs,” Mialich said.

By 1001 GMT, the euro was up 0.3 percent on the day at
$1.3187 (EUR=: ). It had jumped more than 1 percent the previous
day after hitting an 11-week low at $1.2969 on Tuesday.

Bids from Asian and Middle East accounts seen around $1.3130
supported the downside, traders said.

It rose to the day’s high of $1.3197 as stop-loss orders
were triggered above $1.3180 and after the results of Spanish
and French government bond auctions showed they were relatively
well received. [ID:nMDT009552] [ID:nTAR01130]

Offers were seen around $1.3180/1.3200, traders said.

The euro has fluctuated on either side of its 200-day moving
average at $1.3123 and analysts said disappointment from the ECB
could see it resume the fall it began in early November and head
back below $1.30.

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Interactive timeline on euro zone debt crisis in 2010:

http://link.reuters.com/nyx95q

Multimedia coverage on the euro zone crisis on Top News:

http://r.reuters.com/hus75h

Euro zone graphics package: http://r.reuters.com/hyb65p

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“If (the ECB) can get a temporary positive spin on things we
will get a chance to sell at $1.33 and if they don’t we will
have to crush the euro back through $1.30,” a London-based
trader said.

“Either way, it’s a sell,” he said, adding the ECB at this
point can do “nothing more than keep the wolves at bay for a bit
longer.”

The euro was earlier supported after a U.S. official told
Reuters Washington would support boosting an EU rescue facility
via IMF funds, although a Treasury Department spokesman later
said an “extra commitment is not something we’re discussing
right now.” [ID:nWAT014766].

The U.S. dollar was little changed against the yen at 84.12
yen (JPY=: ), not far from a two-month high of 84.41 yen hit on
Monday. Robust U.S. data and higher U.S. bond yields may support
the greenback, traders said.
(Additional reporting by Naomi Tajitsu, editing by Catherine
Evans)

FOREX-Euro holds firm as all eyes on possible ECB steps