Euro Falls As German ZEW Index Drops; Jackson Hole Summit Awaited

The euro dropped against its key counterparts in the European session on Tuesday, as German economic confidence weakened to a 10-month low in August, and investors await upcoming annual conference of global central bankers in Jackson Hole, with speeches from Janet Yellen and Mario Draghi in the spotlight.

Survey data from the Mannheim-based Centre for European Economic Research/ZEW showed that the economic sentiment index declined to 10.0 in August from 17.5 in July. This was the lowest score since October 2016, when the reading was 6.2.

The indicator remained significantly below the long-term average of 23.8 points and the expected level of 15.0.

The Fed's annual Jackson Hole symposium commences on Thursday, with the key theme to be "Fostering a dynamic global economy."

Fed's chair Yellen will be speaking on financial stability, while ECB President Mario Draghi is expected to stick to 'the script of the conference' rather than talking of monetary policy pullback.

The euro showed mixed performance in the Asian session. While the currency rose against the franc and the yen, it held steady against the pound. Against the greenback, it fell.

The euro eased back to 0.9155 against the pound, from its early 1-year high of 0.9173. The euro is seen finding support around the 0.90 region.

Data from the Office for National Statistics showed that the UK public sector net borrowing was in surplus in July.

Public sector net borrowing excluding public sector banks was in GBP 0.2 billion surplus, which was the first July surplus since 2002.

The single currency edged down to 1.1343 against the franc, after having advanced to a 6-day high of 1.1385 at 2:45 am ET. If the euro extends decline, it may find support around the 1.10 area. Figures from the Federal Customs Administration showed that Switzerland's trade surplus increased in July despite a fall in exports.

The trade surplus rose to CHF 3.6 billion from CHF 2.7 billion in June.

The euro dropped to 1.1745 against the greenback and 128.33 versus the yen, off its previous high of 1.1824 and a 5-day high of 129.18, respectively. The euro is likely to find support around 1.15 against the greenback and 127.00 versus the yen.

The single currency reached as low as 1.4784 against the loonie, down from Monday's closing value of 1.4820. On the downside, 1.46 is likely seen as the next support level for the euro.

Looking ahead, Canada retail sales and U.S. Federal Housing finance agency's house price index for June are set for release in the New York session.