* Rate cut bets sink dollar vs euro
* RBA rate decision at 0330 GMT closely watched
* G7 finance ministers conference call at 1200 GMT
* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, March 3 (Reuters) - The euro held steady just under its highest in two months against the dollar on Tuesday, on expectations that coronavirus-driven monetary easing in the United States can and will run deeper than any similar action in Europe.
Both U.S. Federal Reserve Chairman Jerome Powell and European Central Bank (ECB) President Christine Lagarde have hinted at action in recent days.
But with the ECB’s benchmark refinancing rate at 0% and the Fed’s funds rate range between 1.5% and 1.75%, the Fed has more room to manoeuvre, leading investors to unwind carry trades accordingly.
The euro climbed as high as $1.1185 overnight, its highest since early January while the dollar sank to a six-week low against a basket of currencies.
“The dollar is finding good sellers here,” said Chris Weston, head of research at brokerage Pepperstone, in a note.
“The markets are seeing vulnerabilities by what is priced into rates (and) senses a Fed who may go hard at 18 March meeting and cut by 50 basis points.”
The euro last bought $1.1129 and the dollar steadied on the basket at 97.544, but moves were capped as traders waited to see whether central banks can live up to expectations.
The Japanese yen was steady at 108.26 per dollar. The British pound inched higher to $1.2767.
Some details may be revealed after G7 finance ministers and central bank governors hold a conference call at 1200 GMT to discuss measures to deal with the widening coronavirus outbreak.
The Reserve Bank of Australia’s (RBA) interest rate decision at 0330 GMT will also be closely watched, since it is the first major policy meeting since last week’s dramatic shift in money market pricing.
Futures imply that a 25-basis-point cut is all but certain, leaving the Australian dollar vulnerable to a surprise either side.
“If they cut by 50 (basis points), it will fall,” said Westpac FX analyst Imre Speizer.
“If they cut by 25 and signalled more to come, that would probably hold the Aussie where it is. If they cut by 25 and signalled no more to come, I think the Aussie would rise.”
The Aussie, which hit an 11-year low as markets dived with growing pandemic fears on Friday, was steady in morning trade at $0.6537 - about 1.6% above its trough.
The New Zealand dollar also held steady, at $0.6263, since the RBA’s decision may force the hand of New Zealand’s central bank when it meets later in the month.
Also on the horizon is the release of euro zone inflation data at 1000 GMT and the Super Tuesday Democratic Party primaries in the United States.
The Bank of Canada meets to set its policy rate on Wednesday. (Reporting by Tom Westbrook; editing by Jane Wardell)