The euro fell against its key counterparts in the European session on Wednesday, as data showed that Eurozone inflation moved close to stagnation in May, as initially estimated, and a surge in new coronavirus infections in Beijing, Japan and the U.S. stoked fears about economic recovery.

Final data from Eurostat showed that Eurozone inflation slowed to 0.1 percent from 0.3 percent in April. The rate came in line with the estimate published on May 29.

This was the lowest since June 2016. In the same period last year, inflation was 1.2 percent.

Excluding food, alcohol and tobacco, core inflation held steady at 0.9 percent in May, as initially estimated.

China cancelled over 1,200 flights and schools in the capital were closed again as fears mounted about a second wave of infections.

Beijing reported 31 new cases of novel coronavirus for June 16, four more than the day before and taking the total number of cases to 137 in six days.

South Korea confirmed 43 more coronavirus cases in 24 hours, Brazil reported a record 34,918 new infections and India registered over 10,000 new Covid-19 cases for the fifth day in a row, while new coronavirus infections hit record highs in six U.S. states on Tuesday.

The euro dropped to 120.49 against the yen, after rising to 121.23 at 3:30 am ET. The euro is seen finding support around the 117.00 mark.

Data from the Ministry of Finance showed that Japan recorded a merchandise trade deficit of 833.388 billion yen in May.

That beat forecasts for a shortfall of 970.8 billion yen following the 930 billion yen deficit in April.

The euro depreciated to 1.1225 against the greenback, its lowest level since June 12. If the euro falls further, it is likely to test support around the 1.10 region.

The euro was down at 1.0662 against the franc, setting a 5-day low. Should the euro falls further, it may test support around the 1.05 region.

The single currency pulled back to 0.8951 against the pound, from a high of 0.8990 seen at 3:45 am ET. Further decline in the currency is likely to see support around the 0.88 level.

Data from the Office for National Statistics showed that UK inflation eased to a four-year low in May.

Consumer price inflation eased to 0.5 percent in May, as expected, from 0.8 percent in April. This was the lowest since June 2016, when a similar 0.5 percent was reported.

The euro retreated to 1.6294 against the aussie and 1.7418 against the kiwi, from its early highs of 1.6426 and 1.7508, respectively. The euro is likely to challenge support around 1.61 against the aussie and 1.72 against the kiwi. The EUR/CAD pair hit a weekly low of 1.5208, down from Tuesday's closing value of 1.5251. The euro may locate support around the 1.51 level.

Looking ahead, Canada CPI, U.S. building permits and housing starts - all for May are set for release in the New York session.

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