By Anora Mahmudova, MarketWatch , Kosaku Narioka

Shared currency trims decline in preholiday trade

The euro trimmed its decline versus the dollar Wednesday after falling to a seven-month low following a news report that said the European Central Bank was considering a range of further monetary policy measures to shore up the eurozone economy.

The drop in the euro tracked a fall in German government yield bonds after news reports that the European Central Bank was considering further measures to shore up the eurozone economy.

Reuters reported (http://uk.reuters.com/article/2015/11/25/uk-ecb-policy-meeting-idUKKBN0TE0T220151125) that European Central Bank policy makers have considered adding purchases of regional bonds and even rebundled loans with a risk of nonpayment.

The two-year yield on German government debt initially fell further to negative 0.4%, taking the euro , which is closely correlated with it to trade as low as at $1,057 in early trade. The currency was trading at $1.0619 Wednesday, from $1.0654 late Tuesday.

"Euro got hit earlier all due to news reports that the ECB will be easing further, but bounced up from its $1.05 support level, which remains pretty strong," said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

"For the euro to breach that support level, either the ECB will need to expand its QE program by more than currently anticipated or the Fed would have to signal a very aggressive rate hike path. Neither of these seem likely at this point," Schlossberg said.

Schlossberg noted that the moves this week may also be exacerbated by low liquidity due to holiday-shortened week. U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday. (http://www.marketwatch.com/story/when-do-markets-close-around-thanksgiving-2015-11-23)

"Today's choppy trade suggests liquidity was rather low with some late-day profit-taking in the dollar trade," he said.

The U.S. dollar trimmed earlier gains, with the ICE U.S. Dollar Index rising 0.3% to 99.82. In early trade the index traded above 100.

The dollar rose to Yen122.75 from Yen122.43 late Tuesday in New York

Analysts noted that Wednesday's economic data came in mostly in line or above expectations, suggesting the Federal Reserve is likely to raise interest rates in its next meeting in December.

Analysts noted that the appreciation of the dollar so far has already priced in a rate increase in December, and that further appreciation is unlikely if the Fed takes a slow approach to subsequent rate increases.

In Wednesday's economic news, weekly jobless claims (http://www.marketwatch.com/story/us-jobless-claims-drop-12000-to-260000-2015-11-25)fell to 260,000 last week, near the lowest level in years. Consumer spending (http://www.marketwatch.com/story/consumer-spending-barely-rises-again-in-october-2015-11-25) rose slowly in October for the second straight month, as Americans boosted savings and spent less on new cars and trucks. Meanwhile, U.S. orders for long-lasting or durable goods (http://www.marketwatch.com/story/durable-goods-orders-snap-back-in-october-2015-11-25)rebounded in October to show the first increase in three months. New home sales rebounded in October (http://www.marketwatch.com/story/new-home-sales-jump-107-but-industry-is-treading-water-2015-11-25), but the underlying trend continues to move sideways.

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(END) Dow Jones Newswires

November 25, 2015 15:26 ET (20:26 GMT)