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Euro Drops As Eurozone Economic Activity Slows To 6-month Low

02:17, 24th July 2017

(RTTNews) - The euro slipped against its key counterparts in early European deals on Monday, after a data showed that Eurozone private sector growth slowed for the second successive month in July to the lowest since January.

Flash data from IHS Markit showed that the composite output index fell to a 6-month low of 55.8 in July from 56.3 in June. The reading was expected to drop marginally to 56.2.

The services Purchasing Managers' Index remained unchanged at 55.4 in July. The expected reading was 55.5.

The factory PMI declined more than expected to 56.8 in July from 57.4 in June. The score was seen at 57.2.

The PMI report from Germany was also disappointing, with private sector output growth slowing for the second month in July.

Germany's composite output index slid to 55.1 in July from 56.4 in June. This was the weakest expansion since January.

The euro was also weighed by risk aversion, as investors adopted a cautious stance ahead of the U.S. Federal Reserve's monetary policy meeting later this week.

The euro showed mixed performance in the Asian session. While the currency held steady against the franc and the yen, it rose against the greenback. Against the pound, the euro dropped.

The single currency dropped to 1.5643 against the kiwi and 1.4630 against the aussie, from its early highs of 1.5717 and 1.4759, respectively. The euro is poised to challenge support around 1.54 against the kiwi and 1.44 against the aussie.

The 19-nation currency hit a 4-day low of 1.4577 against the loonie, compared to Friday's closing value of 1.4625. Continuation of the euro's downtrend may see it challenging support around the 1.44 region.

The European currency fell to a 4-day low of 128.87 against the Japanese yen, after having advanced to 129.76 at 6:45 pm ET. The next possible support for the euro is seen around the 126.00 area.

Figures from the Cabinet Office showed that Japan's leading index increased less than initially estimated in May.

The leading index, which measures the future economic activity, rose to 104.6 in May from 104.2 April. The reading for May was revised down slightly from 104.7.

The euro weakened to 4-day lows of 1.1015 versus the franc and 0.8932 versus the pound, off its early highs of 1.1049 and 0.8984, respectively. On the downside, 1.08 and 0.88 are possibly seen as the next support levels for the euro against the franc and the pound, respectively.

Having advanced to near a 2-year high of 1.1684 against the greenback at 8:00 pm ET, the euro reversed direction and edged down to 1.1630. If the euro-greenback pair extends slide, 1.13 is possibly seen as its next support level.

Looking ahead, Canada wholesale sales data for May, U.S. Markit's flash PMI reports for July and existing home sales data for June are slated for release in the New York session.

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