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Euro Slides After ECB Draghi's Warning Over Protectionism

The euro weakened against its major counterparts in the European session on Thursday, as the European Central Bank President Mario Draghi expressed concerns over protectionism, saying that a trade war poses downside risk to the outlook.

In his customary press conference, Draghi said that an "increase in protectionism" and other global factors, such as the euro-exchange-rate trends, could pose risks to the euro area's growth.

"If you put tariffs against what are your allies, one wonders who the enemies are," Draghi remarked.

Meanwhile, Draghi asserted that Eurozone economic growth is projected to expand at a somewhat faster pace than previously expected in the near term.

The outlook for growth "confirms our confidence that inflation will converge towards our inflation aim of below, but close to, 2% over the medium term," he reiterated.

The ECB revised up its growth forecasts to 2.4 percent this year, from its previous forecast of 2.3 percent. For 2019 and 2020, it still expects growth to be 1.9 percent and 1.7 percent, respectively.

The ECB kept its main refi rate is currently at a record low zero percent and the deposit rate at -0.40 percent. The marginal lending facility rate is 0.25 percent.

The bank changed its forward guidance, omitting the mention of its stance that it will boost the asset purchases, should outlook worsens.

In economic news, figures from Destatis showed that Germany's factory orders declined more than expected in January.

New orders in manufacturing dropped 3.9 percent month-on-month in January, reversing a revised 3 percent rise in December. Orders were forecast fall moderately by 1.8 percent.

The currency fell against its major counterparts in the Asian session.

The euro dropped to a 2-day low of 1.2363 against the greenback, from an early near a 3-week high of 1.2446. The euro is poised to target support around the 1.22 mark.

The euro reversed from an early 1-1/2-month high of 1.1741 against the franc, easing to 1.1702. The euro may challenge support around the 1.16 mark.

Pulling away from an early 2-day high of 131.98 against the yen, the euro weakened to 131.03. The next possible support for the euro is seen around the 128.00 mark.

Data from the Cabinet Office showed that Japan's gross domestic product rose a seasonally adjusted 0.4 percent on quarter in the fourth quarter of 2017.

That exceeded expectations for an increase of 0.2 percent after last month's preliminary reading suggested a gain of 0.1 percent.

The 19-nation currency weakened to a 2-day low of 0.8907 against the pound, from an early high of 0.8957. Next likely support for the euro is seen around the 0.88 level.

Survey data from the Royal Institution of Chartered Surveyors showed that UK house prices stabilized in February and property coming to the market for sale declined.

The net house price balance fell to zero in February.

The euro eased back to 1.7009 against the kiwi, from an early near 3-month high of 1.7131. If the euro falls further, 1.68 is seen as its next support level.

The euro hit a 3-day low of 1.5933 against the loonie, off its early high of 1.6067. On the downside, 1.55 is seen as the next support level for the euro.

The single currency fell back to 1.5835 against the aussie, from an early high of 1.5941. This may be compared to a 2-day low of 1.5831 hit at 9:30 pm ET. The euro is seen finding support around the 1.57 mark.

Looking ahead, at 11:00 am ET, the Bank of Canada Governor Stephen Poloz speaks at the unveil of the new $10 bank note, in Halifax.

At 3:35 pm ET, the BOC Deputy Governor Timothy Lane speaks about the March interest rate decision at the Vancouver Board of Trade.

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