The euro weakened against the other currencies in the early European session on Tuesday amid risk aversion, as European stocks declined ahead of central bank meetings in the United States and Japan this week, while commodities fell.
The U.K.’s FTSE 100 index is currently down 0.40 percent or 25.54 points at 6,391, France’s CAC 40 index is down 0.26 percent or 12.54 points at 4,884 and Germany’s DAX is down 0.10 percent or 10.74 points at 10,790.
The two-day policy meeting of the U.S. Federal Reserve gets underway today and most economists expect the Fed to leave interest rates unchanged. The accompanying statement is also expected to remain dovish as a higher dollar and falling oil prices exert downward pressure on inflation.
Crude oil prices extended its loss, as U.S. inventory data is expected to show another increase in crude stocks, and global demand remains lackluster.
Meanwhile, the European Central Bank chief economist Peter Praet said that the central bank has “no taboos” in terms of its unconventional asset purchases.
“The central bank is having an “in-depth 360-degrees reflection” on the measures needed to push inflation back to just below 2.0 percent,” Praet told. “We will assess this in December, notably in light of the new macroeconomic staff projections,” he added. The weak performance of the French economy has been surprising,” he said.
In the Asian trading today, the euro held steady against its major rivals.
In the European trading, the euro fell to nearly a 2-month low of 132.92 against the yen, from an early high of 133.90. If the euro extends its downtrend, it is likely to find support around the 132.00 area.
Pulling away from early 4-day highs of 1.1072 against the U.S. dollar and 0.7211 against the pound, the euro dropped to 1.1036 and 0.7191, respectively. The euro may test support near 1.08 against the greenback and 0.69 against the pound.
Against the Australian and the New Zealand dollars, the euro slid to 1.5217 and 1.6284 from early 4-day highs of 1.5308 and 1.6361, respectively. The next possible downside target levels for the euro are seen at 1.48 against the aussie and 1.72 against the kiwi.
Meanwhile, the euro rose to a 4-day high of 1.4578 against the Canadian dollar, from an early low of 1.4536 and held steady thereafter.
Against the Swiss franc, the euro rose to 1.0869 from an early low of 1.0848. The euro is likely to find resistance around the 1.10 region.
Looking ahead, U.S. durable goods orders for September, S&P/Case-Shiller U.S. home price index for August and Markit’s preliminary U.S service sector PMI report, U.S. consumer confidence index and U.S. Richmond manufacturing index, all for October, are slated for release in the New York session.
At 1:00 pm ET, Bank of Canada Deputy Governor Tim Lane will give a speech in Halifax on the topic “Inflation Targeting – A Matter of Time.”
The material has been provided by InstaForex Company – www.instaforex.com