EURJPY Euro vs Japanese Yen

The euro drifted lower against its major counterparts in the European session on Tuesday, after the European Central Bank President Mario Draghi remarked that the bank would adopt a patient approach in determining the timing of the first-rate rise given increased uncertainty surrounding the bloc's growth outlook.

Speaking at the central bank forum in Sintra, Portugal, Draghi said that ECB would remain patient in determining the timing of the first rate rise and take a gradual approach in adjusting policy thereafter.

He said that monetary policy in the euro area will remain patient, persistent and prudent.

The key ECB interest rates would remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the bank's current expectations of a sustained adjustment path, he reiterated.

Draghi observed that the economy continues on a growth path and inflation is gradually returning towards objective. But uncertainty permeates the economic outlook.

Draghi added that the bank stands ready to adjust all instruments as appropriate to ensure that inflation continues to move towards the target.

Caution prevailed as a trade dispute between China and the U.S. intensified and oil turned volatile ahead of a critical meeting of crude-producing nations that will determine whether it's time to ramp up production.

Traders eyed looming trade wars after U.S. President Donald Trump threatened new tariffs on $200 billion of Chinese goods and Beijing vowed to "immediately" retaliate.

Data from the European Central Bank showed that the euro area current account surplus declined to a 10-month low in April.

The current account surplus fell to EUR 28.4 billion in April from EUR 32.8 billion in March. This was the lowest surplus since June 2017.

Separate data showed that Eurozone construction output increased in April, after falling in the previous three months.

Construction output advanced 1.8 percent month-over-month in April, reversing a revised 0.2 percent drop in March.

The currency showed mixed trading against its major counterparts in the Asian session. While it fell against the yen and the franc, it held steady against the pound. Against the greenback, it rose.

The euro eased to 0.8758 against the pound, from a 5-day high of 0.8781 seen at 7:30 pm ET. Next key support for the euro is likely seen around the 0.86 level.

The single currency slipped to near a 3-week low of 1.1542 against the greenback, following a 5-day high of 1.1645 touched at 11:15 pm ET. The euro is seen finding support around the 1.13 region.

Extending early fall, the euro shed 1.4 percent to near a 3-week low of 126.65 against the Japanese yen. This may be compared to a 5-day high of 128.51 hit at 6:15 pm ET. The next likely support for the euro is seen around the 125.00 level.

Pulling away from a high of 1.1571 hit at 6:00 pm ET, the euro weakened to near a 3-week low of 1.1492 against the Swiss franc. On the downside, 1.13 is possibly seen as the next support level for the euro.

Report from the State Secretariat for Economic Affairs showed that Swiss economy is forecast to expand as previously estimated this year as strong global economy and favorable exchange rate developments boost demand for domestic products.

The gross domestic product will grow 2.4 percent this year, in line with the estimate published in March. Likewise, the projection for 2019 was retained at 2 percent.

The 19-nation currency edged down to 1.5268 against the loonie, reversing from a 1-1/2-month high of 1.5383 hit at 11:15 pm ET. The euro is poised to challenge support around the 1.51 level.

The euro retreated to 1.6703 against the kiwi and 1.5639 against the aussie, coming off from its early 5-day high of 1.6830 and near a 5-week high of 1.5752, respectively. Continuation of the euro's downtrend may see it challenging support around 1.65 against the kiwi and 1.55 against the aussie.

Looking ahead, U.S. housing starts and building permits for May are scheduled for release in the New York session.

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