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Forex News: Euro Weakens Ahead Of ECB Meeting

Euro Weakens Ahead Of ECB Meeting

07/23/2019 - 08:32:00 (RTTNews)

(RTTNews) - The euro declined against its major counterparts in the European session on Tuesday, as investors await monetary policy meeting by the European Central Bank this week amid expectations of tweaks to the forward guidance, setting stage for the announcement of stimulus package in September.

Economists widely expect the ECB to hint at a rate cut in September, when the central bank releases new economic projections.

Weak economic indicators and heightening global risks have prompted the ECB officials to repeat the possibility of action to further support the economy.

The ECB is widely expected to reduce its deposit rate to minus 0.5 percent from minus 0.4 percent at the September meeting.

Other measures include the re-start of the 'quantitative easing' programme that it ended in December.

Results of a quarterly survey by the European Central Bank showed that Euro area banks unexpectedly tightened the conditions business firms should meet to get loans during the second quarter, due to an uncertain economic outlook.

By contrast, banks had expected credit standards to ease in the second quarter during the previous survey.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the yen and the franc, it was steady against the pound. Against the greenback, it dropped.

The euro depreciated to near a 2-month low of 1.1176 against the greenback, from a high of 1.1210 set at 5:15 pm ET. On the downside, 1.09 is possibly seen as the next support level for the euro.

After an uptick to 121.09 against the yen at 8:45 pm ET, the euro pulled back to 120.84. Next immediate support for the euro is likely seen around the 118.00 region.

Data from the Cabinet Office showed that Japan's government maintained its economic assessment but lifted its view on industrial production.

The government repeated that the economy is recovering at a moderate pace while weakness continuing mainly in exports.

The European currency declined to a 2-year low of 1.0989 against the franc from yesterday's closing value of 1.1006. The currency is likely to find support around the 1.08 level.

The euro edged down to 0.8960 against the pound, following a 5-day high of 0.9005 seen at 4:45 am ET. The euro is seen facing support around the 0.88 level.

The latest quarterly Industrial Trends survey from the Confederation of British Industry showed that UK manufacturers reported a decline in activity over three months to July but firms forecast a slight recovery in months ahead.

A balance of 15 percent reported a fall in new orders compared to +5 percent in three months to April.

The euro retreated to 1.4681 against the loonie and 1.6595 against the kiwi, from its early high of 1.4715 and a 5-day high 1.6638, respectively. If the euro extends decline, 1.44 and 1.64 are possibly seen as its next support levels against the loonie and the kiwi, respectively.

Having climbed to 1.5947 against the aussie at 1:45 am ET, the euro reversed direction, touching a session's low of 1.5894. The euro is poised to find support around the 1.57 region.

Looking ahead, U.S. house price index for May and existing home sales for June are due in the New York session

Eurozone flash consumer sentiment index for July will be out at 10:00 am ET.

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