Euro Falls As ECB Lagarde Says Rate Cut Talks Premature

(RTTNews) - The euro weakened against its major counterparts in the New York session on Thursday, as the European Central Bank held its key interest rates steady and President Christine Lagarde said that it was premature to discuss cutting them.

The Governing Council left the main refinancing rate, or refi, at 4.50 percent, in the first rate-setting session of the year.

The deposit facility rate was retained at a record high 4.00 percent and the lending rate was kept at 4.75 percent.

Markets expect the ECB to embark on an easing spree by the middle of this year as inflation has started to show signs of slowing.

The ECB's forward guidance on interest rates was unchanged.

The central bank reiterated its assessment that "...the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal [return inflation to 2 percent target]."

"The Governing Council's future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary," the bank added.

"The consensus around the table of the Governing Council was that it was premature to discuss rate cuts," Lagarde said during the press conference in Frankfurt.

The euro weakened to a 2-day low of 1.0830 against the greenback and an 8-day low of 0.9384 against the franc, from yesterday's closing values of 1.0884 and 0.9391, respectively. The euro is seen finding support around 1.06 against the greenback and 0.925 against the franc.

The euro dropped to 9-day lows of 159.69 against the yen and 1.6428 against the aussie, from Wednesday's close of 160.55 and 1.6545, respectively. The euro is likely to face support around 155.00 against the yen and 1.61 against the aussie.

The euro declined to an 8-day low of 1.7691 against the kiwi from yesterday's close of 1.7803. Should the euro falls further, it is likely to test support around the 1.74 region.

The euro depreciated to 1.4619 against the loonie, reversing from a 1-1/2-month high of 1.4735 seen at 3:55 am ET. The pair had closed Wednesday's deals at 1.4713. Next key support for the euro is likely seen around the 1.44 level.

The euro touched more than a 5-month low of 0.8520 against the pound, down from a 2-day high of 0.8564 hit at 4:50 am ET. At yesterday's close, the pair was quoted at 0.8553. Further downtrend may take the euro to a support around the 0.84 area.