The euro weakened against other major currencies in the European session on Thursday, as investors remain cautious about the outlook for the EU-US trade relationship.

Markets weigh on macroeconomic concerns against optimism that U.S. negotiators could secure a ceasefire in the Ukraine war.

U.S. President Donald Trump threatened on Wednesday to escalate a global trade war with further tariffs on European Union goods after the EU hit back with import duties on €26 billion worth of American goods "matching the economic scope of the U.S. tariffs."

Canada also responded with 25 percent new tariffs on U.S.-made goods worth C$30 billion (€19 billion) effective at midnight New York time on Thursday, matching the U.S. tariffs "dollar for dollar."

Trump's hyper-focus on tariffs has rattled investors, consumers and business confidence and sparked U.S. recession fears.

Investors are anticipating the German leaders' meeting to discuss a proposal for debt restructuring to boost defense spending and stimulate economic growth.

In economic news, data from Eurostat showed that euro area industrial production increased more than expected in January. Industrial output grew 0.8 percent on a monthly basis in January, reversing a 0.4 percent fall in December, Eurostat reported. Output was expected forecast to climb 0.5 percent. On a yearly basis, industrial production remained flat in January after declining 1.5 percent in December.

In the European trading today, the euro fell to 3-day lows of 0.8388 against the pound and 1.5620 against the Canadian dollar, from early highs of 0.8405 and 1.5672, respectively. If the euro extends its downtrend, it is likely to find support around 0.82 against the pound and 1.49 against the loonie.

Against the Swiss franc, the U.S. dollar and the yen, the euro slipped to 2-day lows of 0.9573, 1.0860 and 160.43 from early highs of 0.9605, 1.0898 and 161.52, respectively. The euro may test support near 0.93 against the franc, 1.03 against the greenback and 155.00 against the yen.

Looking ahead, U.S. building permits for January, PPI for February and U.S. weekly jobless claims data are slated for release in the New York session.

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