The euro was steady against the dollar on Tuesday as prospects of weakness in the U.S. economy leading to further monetary easing offset poor euro zone data and doubts about a European plan to support indebted countries.

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Analysts and traders said the euro could make some gains as investors trim bearish positions built in the run-up to last week's European summit, though a likely rate cut by the European Central Bank would limit gains. 

Data showing U.S. manufacturing activity contracted for the first time in nearly three years increased the chance of more easing by the Federal Reserve, which is likely to weigh on the dollar and bolster growth-linked currencies. 

But signs out of the euro zone were also discouraging, keeping sentiment towards the euro bearish. The jobless rate rose to a record in May and factory activity contracted again in June.

The euro [EUR=X  1.2572    -0.0009  (-0.07%)   ] was steady at $1.2583, below a peak of $1.2693 hit on Friday in the wake of the summit agreement but comfortably above last week's trough of $1.2405. Traders cited a large option expiry at $1.26.

"There are a lot of implementation risks but for now the market seems to be buying what came out of the EU summit. Before we go back to a trend of selling the euro we may have a bit of consolidation and perhaps some short covering," said Carl Hammer, chief currency strategist at SEB.