On Tuesday, the euro was hurt by a media report that the Bundesbank was ready to back a raft of stimulus measures for the euro zone economy if the European Central Bank cuts its own inflation forecasts next week.
That bolstered expectations of policy easing by the ECB next month and saw the euro drop to a two-month low against the yen and hit a 16-month trough against the pound earlier in the European session.
Reuters on Wednesday quoted sources as saying the ECB was preparing a package of policy options for its June meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms.
Read MoreBundesbank ready to support ECB action if it is needed: Sources
The euro was steady against the dollar at $1.3710, having hit a low of $1.36885 on Tuesday. It was up 0.3 percent against sterling at 81.75 pence, rebounding from a low of 81.26 pence.
"The market is generally 'long euro', and so should find it easy to sell - except people have been burned so many times by thinking the euro was headed lower only to find it bouncing back," said Marshall Gittler, head of global FX strategy at IronFX.
"On the other hand, few people are willing to pick a bottom when it looks as if this may be the real thing with regards to a change in sentiment at the ECB."
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