CANBERA (dpa-AFX) - The euro declined against its major counterparts during the early European trading session on Tuesday, as odds of a European Central Bank rate cut grew after President Christine Lagarde said that the central bank is prepared to take measures to protect the economy from the coronavirus outbreak.
Lagarde's statement came after central bank chiefs of the U.S. and Japan pledged to act to support their economies from the impact of coronavirus.
'The coronavirus outbreak is a fast developing situation, which creates risks for the economic outlook and the functioning of financial markets,' ECB chief Christine Lagarde said in a statement.
'We stand ready to take appropriate and targeted measures as necessary and commensurate with the underlying risks.'
Markets are pricing in a rate cut next week when the ECB meets in Frankfurt.
The euro dropped to 1.0638 against the franc and 1.1100 against the greenback, from its early highs of 1.0688 and 1.1156, respectively. The euro is seen finding support around 1.04 against the franc and 1.09 against the greenback.
The euro edged down to 0.8682 against the pound, after rising to 0.8739 at 5:30 pm ET. If the euro falls further, it is likely to test support around the 0.85 region.
Having risen to a 5-day high of 120.95 at 6:45 pm ET, the euro reversed direction and weakened to 119.82 versus the yen. The euro is poised to challenge support around the 118.00 mark.
Data from the Cabinet Office showed that Japan's consumer confidence fell in February.
On a seasonally adjusted basis, the consumer confidence index decreased to 38.4 in February from 39.1 in January and December. Economists had expected a score of 38.3.
The single currency ticked down to 1.7724 against the kiwi and 1.6939 against the aussie, off its early highs of 1.7824 and 1.7102, respectively. Next key support for the euro is likely seen around 1.75 against the kiwi and 1.60 against the aussie.
Eurozone flash CPI for February and PPI and jobless rate for January are scheduled for release shortly.
At 2:50 pm ET, Federal Reserve Bank of Cleveland President Loretta Mester will deliver a speech about the economic outlook and monetary policy at the Society of Professional Economists Annual Dinner, in London.
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