The euro extended its early decline against the other major currencies in European deals on Wednesday, as Eurozone inflation was revised downwards in August, taking annual inflation further away from the European Central Bank’s inflation goal of 2 percent.
Final data from Eurostat showed that Eurozone inflation slowed to 0.1 percent in August from 0.2 percent in July.
The rate for August was revised down from 0.2 percent.
Excluding energy, food, alcohol and tobacco, core inflation slowed to 0.9 percent in August from 1 percent a month ago. Eurostat initially estimated the core rate to remain unchanged at 1 percent in August.
On a monthly basis, consumer prices remained flat in August.
The currency has been already weighed by comments by the European Central Bank vice president Vitor Constancio, who indicated there is scope to expand asset purchase programme, as euro area inflation could turn negative again in the coming months.
Constancio acknowledged that the ECB’s asset purchases were very less, compared to those done by the other major central banks. He added that there is enough room to enlarge the programme to attain the objective of sustained path of inflation.
The Federal Reserve’s two-day Fed meeting ends tomorrow, with opinion divided about whether the U.S. central bank will hike short-term rates for the first time in nearly a decade.
The euro ended the Asian session in a mixed way. While the currency held steady against the franc, greenback and the pound, it declined against the yen.
In European deals, the euro depreciated by 0.72 percent to hit more than a 2-week low of 1.5662 against the aussie. The pair ended Tuesday’s trading at 1.5775. The euro is poised to find support around the 1.54 zone.
The single currency declined to 6-day lows of 1.4849 against the loonie and 1.7651 against the kiwi, reversing from its previous highs of 1.4953 and 1.7799, respectively. The next possible support for the euro may be located around 1.47 against the loonie and 1.75 against the kiwi. The euro was valued at 1.4926 against the loonie and 1.7718 against the kiwi when it finished yesterday’s trading.
The euro slipped to 1.1227 against the greenback, its weakest since September 10, and was down by 0.63 percent from an early high of 1.1298. At Tuesday’s close, the pair was worth 1.1266. If the euro continues slide, it is likely to challenge support near the 1.10 area.
The 19-nation currency weakened to a 2-day low of 1.0941 against the Swiss franc and a 6-day low of 0.7282 against the pound, off its early high of 1.0975 and a 2-day high of 0.7359, respectively. Further weakness may lead the euro to support levels of around 1.08 against the franc and 0.716 against the pound. The euro-franc and the euro-pound pairs were worth 1.0975 and 0.7344, respectively at yesterday’s close.
Pulling away from an early high of 135.83 against the Japanese yen, the euro edged down to 135.15. The pair was trading at 135.71 at Tuesday’s New York session close. On the downside, 134.00 is possibly seen as the next support level for the euro.
Japan’s economy has continued to recover moderately, the Bank of Japan said in its monthly report.
Exports and industrial production have recently been more or less flat, the bank said. This was a downgrade from its earlier view that exports and industrial production have been picking up.
Looking ahead, U.S. CPI for August and NAHB housing market index for September, as well as Canada manufacturing shipments for July are to be released in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com