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Forex News: Euro Falls After Eurozone Inflation Slows

Euro Falls After Eurozone Inflation Slows

06/30/2017 - 06:19:00 (RTTNews)

(RTTNews) - The euro dropped against its major counterparts in the European session on Friday, as Eurozone inflation slowed from last month in June, primarily driven by softer energy prices, reinforcing hopes that the European Central Bank will stick to its loose monetary policy through the year.

Flash data from Eurostat showed that Eurozone inflation eased slightly in June on slowing energy price growth.

Consumer prices climbed 1.3 percent year-on-year in June, slightly slower than the 1.4 percent increase seen in May. Inflation was forecast to slow to 1.2 percent.

The European Central Bank targets inflation 'below, but close to 2 percent.'

Meanwhile, core inflation, which excludes energy, food, alcohol & tobacco, accelerated to 1.1 percent from 0.9 percent a month ago. The rate was expected to ease to 1 percent.

The currency was also weighed by data showing rising German unemployment in June.

Data from the Federal Labor Agency showed that the number of unemployed persons rose by 7,000 from May, confounding expectations for a decline of 10,000.

The jobless rate held steady at 5.7 percent in June, in line with expectations.

European shares edged higher, following sharp losses in the previous session on concerns over tighter monetary policy by major central banks. Investors seem to shrug off upbeat Chinese manufacturing data that added to signs of a stabilizing economy.

The currency dropped against its major rivals in the Asian session, with the exception of the franc.

The euro dropped to a 2-day low of 127.46 against the Japanese yen, compared to 128.29 hit late New York Thursday. The next possible support for the euro-yen pair is seen around the 126.00 region.

Data from the Ministry of Internal Affairs and Communications showed that Japan's consumer prices rose 0.4 percent in May.

That was unchanged from the previous month, although it was shy of expectations for 0.5 percent.

The euro, having advanced to more than a 6-week high of 1.0949 against the Swiss franc at 12:45 am ET, reversed direction and dropped to 1.0926. The euro is poised to target 1.08 as the next support level.

Reversing from an early session's high of 1.1445 against the greenback, the euro edged down to 1.1392. Continuation of the euro's downtrend may see it challenging support around the 1.12 mark.

The 19-nation currency slipped to 2-day lows of 1.4790 against loonie and 1.5540 against the kiwi, off its early highs of 1.4884 and 1.5688, respectively. On the downside, 1.44 and 1.53 are likely seen as the next support levels for the euro against the loonie and the kiwi, respectively.

The single currency eased back to 1.4824 against the aussie, heading to violate its early 3-day low of 1.4822. If the euro-aussie pair extends decline, 1.46 is possibly seen as its next support level.

The common currency held steady against the pound, after having fallen to a weekly low of 0.8764 at 3:30 am ET. The euro is seen challenging support around the 0.86 mark.

The third estimate from the Office for National Statistics showed that the UK economy expanded as estimated in the first quarter.

Gross domestic product climbed 0.2 percent sequentially in the first quarter, unrevised from the previous estimate published on May 25. However, growth eased notably from 0.7 percent in the fourth quarter.

Looking ahead, Canada GDP data for April and industrial product price index for May, as well as U.S. personal income and spending data for May, Chicago PMI and University of Michigan's final consumer sentiment index for June are set for release in the New York session.

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