Euro Falls As Eurozone Inflation Slows

(RTTNews) - The euro weakened against other major currencies in the European session on Wednesday, Eurozone inflation slowed to a three-month low in June.

Data from Eurostat showed that Eurozone inflation weakened to 2.8 percent from 3.2 percent in May. This was the lowest rate since March and remained below forecast of 3.0 percent.

Core inflation that excludes energy, food, alcohol and tobacco, softened to 2.4 percent from 2.6 percent in the prior month. Prices were expected to rise 2.5 percent.

Among components, growth in energy prices slowed to 8.7 percent from 10.8 percent. Services inflation came in at 3.2 percent, down from 3.5 percent.

The likelihood that the European Central Bank or the ECB will maintain high interest rates decrease if inflation in the Eurozone, notably Germany, France, and Italy, cools more quickly than anticipated. Inflation in Germany fell from 2.6% in May to 2.3% in June, falling short of the 2.5% rate that markets had predicted.

European stocks traded lower as uncertainty surrounding U.S.-Iran peace efforts, and weak commodity prices rendered the mood cautious.

Investors started focusing on the Sintra Forum, where Fed Chair Kevin Warsh and ECB Christine Lagarde are scheduled to speak later in the day.

In the European trading today, the euro fell to nearly a 1-year low of 0.8593 against the pound and a 2-day low of 1.1380 against the U.S. dollar, from early highs of 0.8618 and 1.1414, respectively. If the euro extends its downtrend, it is likely to find support around 0.85 against the pound and 1.12 against the greenback.

Against the yen and the Swiss franc, the euro dropped to 185.17 and 0.9226 from early highs of 185.71 and 0.9236, respectively. The euro is likely to find support around 182.00 against the yen and 0.91 against the franc.

Looking ahead, U.S. MBA weekly mortgage approvals data, U.S. ADP employment data, U.S. S&P Global manufacturing PMI for June, U.S. construction spending for May and U.S. EIA crude oil data are slated for release in the New York session.