On July 5, a rally in Asian shares fizzled out as markets marked time before the policy decision of the European Central Bank (ECB) with the single currency, euro, staying pressured by widespread expectations of a rate cut for supporting fragile euro zone growth.

The safe-haven U.S. dollar outperformed with its index measured against key currencies .DXY and gained 0.5 percent.

"Until markets see how the ECB intends to respond to the debt problem through means other than interest rate cuts, it would be difficult to take positions on the euro," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

After hitting a seven-week high on Wednesday, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.4 percent, while Japan's Nikkei average .N225 eased 0.3 percent, after closing at a two-month high on Wednesday.

U.S. stock futures were down 0.3 percent to suggest a bearish start for the Wall Street when it resumes after the Independence Day holiday on Wednesday.

"The focus for today's ECB meeting is whether it will take steps other than cutting interest rates, namely restarting SMP or LTRO," added Brown Brothers Harriman's Murata.

It is speculated that the ECB may restart its purchases of troubled euro zone bonds under its securities markets program (SMP) for pushing down eurozone borrowing costs to take a round of long-term refinancing operation (LTRO) to inject additional funds into the financial system. The ECB is also expected to cut its main interest rate by 25 basis points to 0.75 percent.

The euro steadied around $1.2529, stuck in a recent $1.24-$1.27 range against the U.S. dollar.

"We suggest that selling the EUR and buying a relatively 'high beta' currency, such as the AUD, would perform well in light of a more aggressive ECB response to the problems" in Europe, Barclays Capital analysts said in research note.