A possible interest rate rise today has held the euro above its lows.

During a telephone conference today, the board of the European Central Bank will decide whether to raise rates from 3.75 per cent.

Analysts are divided over whether they will make the announcement today or wait for a few weeks.

News that the meeting would be held by telephone led many analysts to predict that a rise would not be announced.

But according to Mr Colin Hunt, chief economist at Goodbody Stockbrokers, the fact the euro is now slightly above its lows means investor sentiment may be turning slightly. "A rate rise today would have a better chance than on previous occasions of boosting the currency," he said.

He added that the ECB needed the currency to move higher. At the moment, the euro's low value is helping exporters while the consumer recovery is being helped by low interest rates. The danger is that using interest rates to boost the currency could make the recovery more unbalanced and kill off the nascent recovery in German consumer sentiment.

This was a minority view, however, and the euro was unable make much headway against the dollar. The euro has lost just over a cent from Tuesday's $0.9155 peak, its highest since May 15th, but remained more than 2 per cent away from its record lows set earlier this month and tested again last week.

The Bundesbank also attempted to talk up the currency. It initiated a broadside defence of the euro in its monthly report, saying the market was undervaluing the euro by 20-30 per cent and that "such misvaluations are not good".

Analysts said it was premature for the euro to take full advantage of any impact the fall in US stocks might have on reducing the US interest rate increase expectations priced into the market, which in turn would knock the dollar.