After a brief recovery, the euro retreated against its major rivals in the European session on Thursday, as investors digested the European Central Bank's decision to begin a series of interest rate hikes from July to fight high inflation.

The Governing Council confirmed that it will raise the key interest rates by 25 basis points at the July monetary policy meeting.

The bank said that it will lift the key interest rates again in September.

"If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting."

Beyond September, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates would be appropriate.

Net asset purchases under the asset purchase programme would end by July 1, the ECB said.

The Governing Council left the main refi rate at a record low of zero percent and the deposit rate at -0.50 percent. The marginal lending facility rate is at 0.25 percent. The decision was in line with expectations.

The euro advanced in the Asian session, ahead of the European Central Bank's interest rate decision that is expected to lay out its path towards normalization to tackle rising prices.

The euro dropped to 1.0669 against the greenback, from a 9-day high of 1.0774 seen at 8:30 am ET. The pair had closed Wednesday's deals at 1.0716. If the euro falls further, it is likely to test support around the 1.04 region.

The euro gave up its gains against the yen and was trading at 142.57. The pair was worth 143.82 when it ended deals on Wednesday. The euro is seen facing support around the 138.00 mark.

Preliminary data from the Japan Machine Tool Builders Association, or JMTBA, showed that Japan's machine tool order growth eased for the fourth successive month in May.

Machine tool orders grew 23.7 percent year-on-year in May, slower than the 25.0 percent rise in April. Orders have been increasing since November 2020.

The euro touched a 2-day low of 1.0374 against the franc, down from a multi-week high of 1.0514 hit at 8:30 am ET. At Wednesday's close, the pair was valued at 1.0486. The next possible support for the euro is seen around the 1.02 region.

The euro declined to a 2-day low of 0.8495 against the pound, following a multi-week high of 0.8592 set at 8:30 am ET. The euro-pound pair had finished yesterday's trading session at 0.8547. The euro may locate support around the 0.82 level.

The euro eased off to 1.4943 against the aussie, after rising to nearly a 2-week high of 1.5041 at 8:40 am ET. The euro-aussie pair was worth 1.4894 at Wednesday's close. The next likely support for the euro is seen around the 1.45 level.

The euro retreated to 1.6604 against the kiwi and 1.3435 against the loonie, off its multi-week high of 1.6735 and a multi-day high of 1.3550, respectively seen in recent deals. The euro had ended yesterday's trading at 1.6614 against the kiwi and 1.3453 against the loonie. Next key support for the euro is likely seen around 1.62 against the kiwi and 1.32 against the loonie.

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