By: Barbara Zigah

The common currency Euro remains steady as the European Central Bank is set to make what many believe will be its second consecutive interest rate cut later in the trading day. As reported at 12:55 p.m. (JST), the Euro was trading against the U.S. Dollar at $1.3401, dropping from an intraday high of $1.3428. Investors have been trading the EUR/USD pair cautiously ahead of the announcement; the broad view is that the ECB will reduce the current rates by 25 basis points, though there are also expectations out to a full 1% drop. The bank is also expected to make an announcement of additional, longer-term lending facilities to increase liquidity.

Once the announcement is made, the focus will resume on the E.U. summit, which is now largely viewed as a make-or-break one. Germany and France have laid bare their plans for tighter fiscal monitoring of the EMU nations and a treaty amendment will need to be ratified by all of the 27 member nations. Even given the urgency, some analysts believe that ratification will be difficult given that several of the non-EMU members are insisting on protections for their nations and have hinted that they would veto the plan if those protections for them were not included.