The euro drifted lower against its major counterparts in the European session on Friday, as the euro area private sector grew at a slower pace in August, signalling that the economic recovery was undermined by rising virus cases and renewed restrictions to combat the spread.

Flash survey data from IHS Markit showed that the composite output index fell unexpectedly to 51.6 in August, while the score was expected to remain unchanged at 54.9. Nonetheless, a score above 50 indicates expansion.

The services Purchasing Managers' Index dropped more-than-expected to 50.1 in August from 54.7 in July. The expected level was 54.5.

The manufacturing PMI came in at 51.7 versus 51.8 a month ago. The reading was forecast to rise to 52.9.

The euro depreciated to 0.8944 against the pound, its lowest level in more than 5 weeks. The euro is poised to challenge support around the 0.88 mark.

Data from the Office for National Statistics showed that UK retail sales rose more-than-expected in July driven by non-food store turnover.

Retail sales grew 3.6 percent month-on-month in July, but slower than the sharp 13.9 percent rise in June and 12.2 percent increase in May. Economists had forecast sales to rise 2 percent.

The euro hit a 10-day low of 124.54 against the yen and a 3-day low of 1.0751 against the franc, down from Thursday's closing values of 125.48 and 1.0765, respectively. The euro is likely to face support around 119.5 against the yen and 1.05 against the franc, if it falls again.

Breaking the key 1.18 level, the euro hit 1.1799 against the greenback. This was the weakest level since August 14 and marked a drop from a 2-day high of 1.1883 seen at 1:15 am ET. Next key support for the euro is likely seen around the 1.16 level.

After an early rally to 1.6506 against the aussie and 1.5644 against the loonie, the euro weakened to a 2-day low of 1.6433 and an 8-day low of 1.5580, respectively. Should the euro falls further, it is likely to test support around 1.62 against the aussie and 1.52 against the loonie.

The euro reversed from an early high of 1.8176 versus the kiwi, with the pair trading at 1.8044. On the downside, support is seen near the 1.76 level.

Looking ahead, Canada retail sales for June and new housing price index for July, as well as U.S. existing home sales the same month will be featured in the New York session.

At 10.00 am ET, European Commission is slated to issue Eurozone flash consumer confidence survey results for August.

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