The ECB said the average weighted rate at which it allotted funds was at 4.32 per cent, while the marginal rate, the lowest rate at which the ECB allocates funds to commercial banks in the auction, was at 4.29 per cent.

The rates were broadly in line with those expected by money market dealers surveyed by Reuters earlier this week and compared with the 4.25 per cent minimum bid level set by the ECB.

"This is very close to your survey and is not going to have a huge impact," said economic adviser at Bank of America, Rob Hayward.

The euro was little changed near $0.94 after the announcement. That compared with the three-week lows below $0.93 it had hit on Monday. Analysts said foreign exchanges had traded choppily for much of the morning, within narrow ranges, and reaction to the auction had been muted with the spotlight on the FOMC meeting.

"People are waiting for the FOMC which is not expected to result in any change in interest rates," said Chris Iggo, currency strategist at Barclays Capital in London. All 29 primary dealers of US treasury securities polled by Reuters expect the Fed to leave rates unchanged at 6.50 per cent. Traders said they would be closely watching the Fed's statement accompanying the rate decision, as it would be critical in shaping up the market's rate outlook. "We expect the Fed to act on its tightening bias only at the August 22 meeting," Paul Meggyesi, senior currency strategist at Deutsche Bank in London said in a note to clients.