The euro declined against its most major rivals in the European session on Wednesday, after European Central Bank President Christine Lagarde signaled a rate hike in July, but stressed that the normalization process would be gradual.

The first rate hike would take place some time after the end of net asset purchases early in the third quarter, Lagarde said at the international conference marking the 30th anniversary of the Bank of Slovenia.

"We have not yet precisely defined the notion of "some time", but I have been very clear that this could mean a period of only a few weeks."

After the first rate hike, the normalization process will be gradual, Lagarde added.

German bond yields fell following Lagarde's comments, with the yield on the 10-year Bund dropping to 0.972 percent.

ECB Governing Council member and Bank of France head Francois Villeroy de Galhau told France Inter radio that the central bank would gradually raise its interest rates from summer.

Final data from Destatis showed that German consumer price inflation hit a record high as estimated in April.

Consumer price inflation rose to 7.4 percent in April from 7.3 percent in March.

The euro dropped to 2-day lows of 1.0435 against the franc and 0.8528 against the pound, off its early highs of 1.0493 and 0.8563, respectively. The next likely support for the euro is seen around 1.02 against the franc and 0.84 against the pound.

The euro touched 2-day lows of 1.3665 against the loonie, 1.5029 against the aussie and 1.6623 against the kiwi, after rising to 1.3731, 1.5192 and 1.6760, respectively in previous deals. The euro is seen finding support around 1.34 against the loonie, 1.47 against the aussie and 1.62 against the kiwi.

The euro pulled back from a prior high of 137.49 against the yen and weakened to a 5-day low of 136.75. On the downside, 133.00 is possibly seen as its next support level.

In contrast, the euro was up against the greenback, at 1.0576. The euro is likely to find resistance around the 1.08 mark.

Looking ahead, U.S. inflation data and monthly budget statement for April are scheduled for release in the New York session.

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