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27.03.201806:57:00UTC+00Euro Drops As Eurozone Economic Confidence Worsens

The euro drifted lower against its most major opponents in the European session on Tuesday, as Eurozone economic confidence deteriorated for the third consecutive month in March due to decline in expectations in industry, services and retail trade.

Survey data from European Commission showed that the economic confidence index fell more-than-expected to 112.6 in March from 114.2 in February. The expected score was 113.3.

The industrial sentiment index came in at 6.4 versus 8.0 a month ago. This marked decrease resulted from managers' more pessimistic views on all three components, namely, production expectations, the current level of overall order books, and the stocks of finished products.

The European Central Bank Governing Council member Erkki Liikanen cautioned about subdued price pressures in the euro area, adding that there would not be abrupt changes to policy "soon."

"A gradual tightening of monetary policy will rest on a more solid basis when indications of inflation rates to potentially temporarily exceed two percent become more prominent in inflation expectations," Liikanen said.

In other economic news, figures from the European Central Bank showed that Eurozone money supply grew at a slower pace in February.

The broad monetary aggregate M3 climbed 4.2 percent year-on-year in February, weaker than the 4.5 percent rise seen in January. The expected growth was 4.6 percent.

The currency held steady against its major rivals in the Asian session, with the exception of the yen.

Reversing from an early near a 6-week high of 1.2476 against the greenback, the euro weakened to 1.2410. The next likely support for the euro is seen around the 1.22 level.

The 19-nation currency pulled back to 131.12 against the Japanese yen, from near a 2-week high of 131.82 hit at 2:45 am ET. On the downside, 130.00 is seen as the next support level for the euro.

Data from the Bank of Japan showed that Japan's producer prices rose 0.6 percent on year in February.

That was shy of expectations for 0.78 percent, which would have been unchanged from the January reading.

Having advanced to a session's high of 1.1774 against the Swiss franc, the euro reversed direction and retreated to 1.1749. If the euro falls further, it may find support around the 1.15 level.

The euro retreated to 1.5959 against the loonie, 1.6067 against the aussie and 1.7056 against the kiwi, from its early high of 1.6014, more than 2-year high of 1.6138 and a 6-day high of 1.7113, respectively. The euro is likely to find support around 1.55 against the loonie, 1.56 against the aussie and 1.68 against the kiwi.

On the flip side, the euro advanced to a weekly high of 0.8794 against the pound, from Monday's closing value of 0.8745. The euro is seen finding resistance around the 0.89 region.

Looking ahead, U.S. S&P/Case-Shiller home price index for January and consumer confidence index for March are due in the New York session.

At 11:00 am ET, Atlanta Fed President Raphael Bostic speaks at the Hope Global Forums Annual Meeting in Atlanta.



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