By Cecile Lefort and Rebecca Howard
SYDNEY/WELLINGTON, Nov 18 (Reuters) - The Australian dollar hovered near three-month highs against the euro on Wednesday after it broke a key barrier on expectations the European Central Bank (ECB) will ease in December.
The common currency dropped to A$1.4956, having lost a full cent since Tuesday. Dealers said the selling accelerated after the euro broke the psychological level of A$1.5000. The next support is found at the Aug. 11 low of A$1.4821.
The euro has shed 3 percent this month, largely on a diverging global outlook for interest rates.
The ECB is expected to inject more cash into the euro zone, while the U.S. Federal Reserve is seen raising interest rates in December. The Reserve Bank of Australia is anticipated to keep rates steady at least for the next couple of months.
Broad euro weakness underpinned the Australian dollar against its U.S. counterpart. The Aussie was steady at $0.7107 AUD=D4 , having proved resilient to another slide in prices of iron ore, Australia's top export earner.
Resistance was found around the 38.2 percent retracement of the October-November fall at $0.7158, a level tested four times this month. Support was seen at a recent low of $0.7016.
The New Zealand dollar NZD=D4 opened weaker because global dairy prices fell 7.9 percent at the latest GlobalDairyTrade auction, but pared the losses as some investors took profits after being short going into the auction.
The kiwi traded 0.02 percent higher at $0.6471. Analysts said investors will be watching for the minutes of the Federal Reserve's Open Market Committee October meeting later on Wednesday for direction.
New Zealand government bonds gained slightly, sending yields 4 basis points lower at the short end of the curve and 2 basis points lower at the long end.
Australian government bond futures were a touch firmer, with the three-year bond contract steady at 97.870. The 10-year contract added 1 tick to 97.0600, while the 20-year contract was half a tick higher at 96.5250. (Editing by Richard Borsuk)