CANBERA (dpa-AFX) - The euro depreciated against its major counterparts in the European session on Tuesday, in reaction to comments from European Central Bank President Christine Lagarde indicating that any policy adjustment would be very gradual.
In her testimony before the European Parliament Economic and Monetary Affairs Committee on Monday, Lagarde seemed to step back from her hawkish rhetoric made last week, saying that there would not be a rate hike before ending the asset purchase program.
'There is a defined sequencing between the end of our net asset purchases and the lift-off date.'
Lagarde pushed back against expectations that the ECB could tighten policy aggressively to control inflation.
Even though inflation is likely to remain high in the near term, there are no signals that it would be persistently and significantly above the ECB's target over the medium term, Lagarde added.
The euro weakened to 4-day lows of 0.8413 against the pound and 1.0529 against the franc, off its early highs of 0.8457 and 1.0572, respectively. The euro may locate support around 0.82 against the pound and 1.04 against the franc.
Reversing from its previous highs of 1.6069 against the aussie and 1.4516 against the loonie, the euro depreciated to 5-day lows of 1.5975 and 1.4452, respectively. The currency is likely to find support around 1.56 against the aussie and 1.42 against the loonie.
The euro fell to a 5-day low of 1.1396 against the greenback and a 4-day low of 1.7150 against the kiwi, after gaining to 1.1449 and 1.7248, respectively in early trades. The euro is poised to challenge support around 1.12 against the greenback and 1.66 against the kiwi.
The European currency reversed from an early high of 132.01 against the yen, dropping to 131.48. If the currency falls further, it may challenge support around the 127.5 level.
Looking ahead, U.S. and Canadian trade data for December will be released in the New York session.
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