The euro weakened against the other major currencies in the pre-European session on Thursday, as traders await additional stimulus from the European Central Bank at its monetary policy decision later in the day in Brussels.
The European Central bank will announce its interest rate decision at 7:45 am ET. The bank is expected to cut its deposit rate deeper into negative territory, while keeping the refi rate unchanged.
Economists expect the bank to cut its deposit rate to -0.40 percent from -0.30 percent.
Markets expect the ECB President Mario Draghi to expand its quantitative easing to revive flagging growth and boost inflation at the policy meeting.
The currency began weakening after data showed that Germany’s exports dropped unexpectedly in January, while imports grew more than forecast.
Data from Destatis showed that the German exports fell 0.5 percent month-on-month in January, following a 0.7 percent drop in December. This was the second consecutive decrease in shipments. Economists had forecast exports to grow 0.8 percent.
Meanwhile, imports grew 1.2 percent from December, when it fell 1.6 percent. The pace of growth was faster than an expected 0.8 percent.
As a result, the trade surplus decreased to a seasonally adjusted EUR 18.8 billion from EUR 20.3 billion in the previous month.
At the same time, the current account surplus fell to EUR 13.2 billion in January from EUR 14.9 billion in the previous year. The expected level was EUR 17 billion.
In the Asian trading today, the euro held steady against its major rivals.
In the early European session, the euro fell to a 9-day low of 1.4543 against the Canadian dollar and a 2-day low of 1.0935 against the Swiss franc, from early highs of 1.0975 and 1.4584, respectively. If the euro extends its downtrend, it is likely to find support around 1.40 against the loonie and 1.08 against the franc.
Against the U.S. dollar, the pound and the Australian dollar, the euro dropped to 1.0963, 0.7724 and 1.4630 from early highs of 1.1003, 0.7741 and 1.4731, respectively. The euro may test support near 1.08 against the greenback, 0.76 against the pound and 1.44 against the aussie.
Pulling away from an early 10-day high of 1.6588 against the NZ dollar and a 2-day high of 124.91 against the yen, the euro edged down to 1.6479 and 124.43, respectively. On the downside, 1.61 against the kiwi and 122.00 against the yen are seen as the next support levels for the euro.
Looking ahead, Canada housing price index for January and U.S. weekly jobless claims for the week ended March 5 are slated for release in the New York session.
At 2:00 pm ET, U.S. Federal budget balance for February is set to be published.
At 4:15 pm ET, Bank of Canada Governor Stephen Poloz is expected to speak at the Institute for Advanced Research in Ottawa.
The material has been provided by InstaForex Company – www.instaforex.com