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The euro was broadly flat on Thursday ahead of euro zone GDP data and the European Central Bank meeting, while the dollar started to recover in early London trading, after a risk-on mood saw it fall overnight.
An advanced reading of euro zone GDP data for the first quarter is due at 0900 GMT. Although lockdown and social distancing measures were introduced for only a small proportion of the period, euro area GDP is expected to decline 3.5 per cent quarter-on-quarter, according to a Reuters poll.
Attention will then focus on the ECB, which is printing cash at a record rate as the coronavirus pandemic sees European countries' debt surge.
The ECB is under pressure to ramp up its response to the virus. There are some expectations that euro zone policymakers will expand debt purchases to include junk bonds and take other steps to ease conditions in credit markets.
Analysts are not ruling out a move later today but expect the ECB to be more likely to act in June.
“No doubt the ECB will underline that it would implement further measures if required,” wrote Commerzbank FX and EM analyst Antje Praefcke in a note to clients.
“But at the same time it is likely to point out that fiscal policy in the euro zone has to make its contributions too,” she wrote.
The euro was broadly flat, at $1.088, having touched a ten-day high.
European member states have struggled to coordinate a debt-sharing recovery fund in response to the coronavirus, which has exposed old political divides in the European Union as southern European economies such as Italy and Spain are the hardest hit.
RBC analyst Adam Cole wrote in a note to clients that he expected the focus of the ECB news conference, due to start at 1230 GMT, will be the aftermath of last week's European leaders' meeting and the issue of fragmentation in the euro zone.
The dollar fell overnight after the US Federal Reserve left the door open to more monetary easing and positive trial results for a drug to treat COVID-19 also boosted risk appetite.
More countries are taking steps to re-open their economies as coronavirus infections slow, giving some cause for optimism.
Against a basket of currencies, the dollar touched a two-week low before recovering somewhat, last up 0.1 per cent on the day. It came close to six week lows versus the yen in early London trading, before starting to recover, last at 106.63 .
The riskier Australian and New Zealand dollars, which rose overnight as risk sentiment improved, dipped down on Thursday morning
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