TOKYO: The euro wallowed near one-week lows on Thursday, with trading subdued in the wake of a US holiday and ahead of a widely expected interest rate cut by the European Central Bank later in the day.

The ECB is due to announce its decision at 1145 GMT, followed by a news conference by ECB President Mario Draghi.

A Reuters poll of economists showed the majority expect the central bank to cut its main rate by 25 basis points to 0.75 per cent, but they were evenly split on whether the ECB will lower its deposit rate.

“A 50 basis point move would be a positive surprise, but no one should count on that happening,” said Masashi Murata, a currency strategist in Tokyo at Brown Brothers Harriman.

Any hints that emerge on how the ECB plans to respond to Europe's debt crisis, such as another long-term refinancing operation (LTRO), will be even more key to market direction than an interest rate move, he said.

A reactivation of the ECB's bond-buy plan is seen unlikely for now, although many investors would like to see it used to cap the bond yields of debt-burdened countries.

The single currency traded at $1.2526, having fallen around 0.7 per cent on Wednesday in trading made subdued by the US July 4th holiday.

Adding to pressure on the euro, surveys showed all of Europe's biggest economies are in recession or heading in that direction.

Support is seen around $1.2495, the 76.4 per cent retracement of Friday's dramatic rally sparked by the European Union's agreement to allow euro zone rescue funds to be used to stabilise bond markets without extra austerity measures and recapitalise banks directly.

Also pressuring the European unit overnight was heavy selling against the Swedish crown, which surged to an 11-1/2 year high after the Swedish central bank kept interest rates on hold at 1.5 per cent.

Traders said the absence of stronger hints on future rate cuts by the Riksbank saw the crown squeeze higher, pushing the euro down some 1 per cent to as far as 8.6495 crowns, lows not seen since late 2000.

The euro was trading not far above a fresh historical low against the New Zealand currency of NZ$1.5541 set on Wednesday, and also lost ground on the yen, slipping to 100.14 from Wednesday's session high of 100.65.

Against the yen, the greenback sank back below the 80 yen level as Japanese exporters sold into a move above it, inching back down to 79.85 with a US bank said to be a buyer.

On the downside, support was seen at last Friday's low of 79.08.

The Bank of England will also meet later Thursday and is expected to launch a third round of monetary stimulus as it moved to counter a recession and the effects of a worsening debt crisis in the euro zone.

These expectations weighed on sterling, which has fallen to $1.5586, down more than a full US cent from Friday's peak.

The Australian dollar, bolstered by upbeat retail sales data on Wednesday, was at $1.0248, having climbed as high as $1.0320 -- its best level since early May.

Australian trade data showed a smaller-than-expected deficit, partly due to a record month of exports to China.