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Euro Slides On ECB Growth Outlook Uncertainty

The euro declined against its major counterparts in the European session on Tuesday, after a media report showed that European Central Bank policymakers expressed doubts about growth projections in the second half of the year citing economic slowdown in China and persistent trade tensions.

Some ECB rate-setters cautioned about a growth rebound in the second half of the year and also questioned the accuracy of the ECB's projection models at the policy meeting held last week, Reuters reported, citing ECB sources.

As these projections serve as a key input into policy decision, more downward revisions in growth and inflation forecasts would further prolong the chance for the bank's first post crisis rate, which is currently expected next year.

Survey data from the Centre for European Economic Research, or ZEW, showed that the German ZEW economic sentiment index rebounded much more than forecast in April.

The economic sentiment indicator rose 3.1 from March, when it fell -3.6. Economists had expected a reading of 0.8.

The currency held steady against its key counterparts in the previous session.

The euro pulled back to 0.8625 against the pound, from a high of 0.8648 seen at 4:00 am ET. The euro is poised to find support around the 0.85 level.

Data from the Office for National Statistics showed that UK employment growth rose more than expected in the three months to February to a record high, causing the jobless rate to remain steady, and total pay growth accelerated.

The level of employment in the UK grew by 179,000 persons to a record high of 32.72 million in the three months to February. Economists had forecast a 173,000 increase.

The euro that closed yesterday's trading at 1.1303 against the greenback fell to a 4-day low of 1.1280. The euro is seen finding support around the 1.11 level.

The single currency declined to a 4-day low of 126.20 against the yen, following a high of 126.68 touched at 8:15 pm ET. The next possible support for the euro is seen around the 124.00 level.

The euro retreated to 1.5105 against the loonie, 1.6704 against the kiwi and 1.5789 against the aussie, from its early 3-week high of 1.5154,4-day highs of 1.6759 and 1.5835,respectively. On the downside, 1.49, 1.66 and 1.55 are possibly seen as the next support levels for the euro against the loonie, the kiwi and the aussie, respectively.

On the flip side, the euro appreciated to 1.1369 against the franc, its strongest since March 15. If the euro rises further, 1.15 is possibly seen as its next resistance level.

Looking ahead, Canada manufacturing sales for February, U.S. industrial production for March and NAHB housing market index for April are set for release in the New York session.

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