2017.10.2305:51:00UTC+00Euro Declines Amid Catalonia Tensions

The euro slipped against its major counterparts in early European deals on Monday, as worries over Catalonia continued after the region's leaders refused to back off from their demand for independence from Spain, ignoring steps to impose direct rule by Prime Minister Mariano Rajoy. Catalan authorities will not abide by orders from Madrid, but will only listen to the will of the Catalan people, Catalan's foreign affairs spokesman Raul Romeva told BBC Radio. The parliament will meet today to debate and decide next steps on Madrid's attempt to liquidate the self-government. On Saturday, Spanish Prime Minister Mariano Rajoy asked lawmakers to grant him unprecedented power to remove the leaders of Catalonia and temporarily control the region from Madrid.

He said that Spain's central government ministries would administer the region's agencies until new elections are called, a shake-up meant to quell Catalan leaders' insurrection.

The European Central Bank reviews its monetary policy on Thursday, with investors waiting to see whether President Mario Draghi will announce the long-awaited start of tapering.

The currency has been trading in a negative territory in the Asian session.

The euro dropped to 5-day lows of 1.1740 against the greenback and 0.8903 versus the pound, off its early highs of 1.1777 and 0.8928, respectively. The euro is seen finding support around 1.16 against the greenback and 0.88 against the pound.

The euro fell to 1.1571 against the franc, 133.61 against the Japanese yen and 1.6835 against the kiwi, from its early high of 1.1600, 4-week high of 134.13 and a 1-1/2-year high of 1.6959, respectively. If the euro falls further, it may challenge support around 1.14 against the franc, 132.00 against the yen and 1.67 against the kiwi.

The single currency retreated to 1.4831 against the loonie, from an early high of 1.4873. On the downside, 1.47 is likely seen as the next support for the euro-loonie pair.

The euro, having advanced to 1.5071 against the aussie at 6:15 pm ET, reversed direction and fell to a 4-day low of 1.5023. Continuation of the euro's downtrend may see it challenging support around against the 1.49 area.

Looking ahead, Canada wholesale sales for August and Eurozone preliminary consumer sentiment index for October are due in the New York session.