Euro steady as analysts guess whether QE extension will be announced soon

The euro held steady against the U.S. dollar on Wednesday, as investors focused on the European Central Bank's monthly policy statement expected on Thursday.

Tuesday's upbeat U.S. housing sector data continued to lend support to the greenback.

EUR/USD hit 1.1386 during European afternoon trade, the session high; the pair subsequently consolidated at 1.1345.

EUR/GBP was last at 0.7344, down 0.03%.

In the U.K., the Office for National Statistics earlier reported that public sector net borrowing fell to £8.63 billion in September from £10.79 billion in August, whose figure was revised from a previously estimated £11.31 billion. Analysts had expected public sector net borrowing to decline to £9.40 billion last month.

Ahead of the ECB's meeting in Malta, analysts begin to guess whether the bank needs to turn up the heat on its 1 trillion euro bond-buying program.

ECB chief Mario Draghi has already hinted that the central bank's quantitative easing program will be extended beyond its September 2016 putative deadline, driving speculation among economists as to if and when the move might be announced.

Economists at BNP Paribas, for example, expect the announcement in December 2015, following a forecast further decline in the euro versus the U.S. dollar:

"We expect no policy change at Thursday's ECB meeting, but look for EURUSD to fall to lower levels," Michael Sneyd and Charlotta Puhringer said in a BNP Paribas note last week, recommending a short EURUSD position at 1.145, targeting 1.090.

Vasileios Gkionakis, global head of foreign exchange strategy at UniCredit Research, also expect a decline in EURUSD and an extension to quantitative easing being announced in early 2016:

"Intra-meeting developments so far have not been sufficient, in our view, for the central bank to pull the trigger on QE2… But we believe that ECB President Mario Draghi will formulate dovish rhetoric to avoid any further appreciation in the exchange rate, which would result in a tightening of financial conditions," he said in a research note on Friday.

Reason for extending QE would be inflation that hovers near zero, concerns over economic growth and external risks from a slowing China, stock market instability and the crisis in Syria and the Middle East.