Euro Drops Ahead Of Dutch Parliamentary Elections

The euro slipped against its major counterparts in the European session on Monday, as investors became nervous ahead of the Dutch election on Wednesday, amid rising popularity of far-right party in opinion polls.

Polls suggest that the conservative Prime Minister Mark Rutte is running almost neck-and-neck with eurosceptic candidate Geert Wilders, who wants to take the Netherlands out of the European Union and stop Muslim immigration.

Although the possibility of a eurosceptic party winning the election is slim, its strong performance could lead to slippage of votes for the mainstream parties, resulting in the possibility of a coalition government.

The European Central Bank President Mario Draghi will speak in Frankfurt later in the day, with investors awaiting more clues about the policy direction.

The euro was trading in a positive territory in the Asian session, with the exception of the franc.

The euro retreated to 1.0663 against the greenback and 0.8731 against the pound, from its early near 5-week high of 1.0714 and near a 2-month high of 0.8787, respectively. The euro is seen challenging support around 1.04 against the greenback and 0.84 against the pound.

Pulling away from an early 1-1/2-month high of 122.89 versus the yen and more than 3-month high of 1.0825 versus the Swiss franc, the euro fell back to 122.14 and 1.0744, respectively. The next possible support for the euro may be found around 118.00 against the yen and 1.04 against the franc.

The single currency eased to 1.4069 against the aussie, 1.5359 against the kiwi and 1.4342 against the loonie, from its previous 6-week high of 1.4184, more than 4-month high of 1.5454 and near a 4-month high of 1.4418, respectively. Continuation of the euro's downtrend may see it challenging support around 1.38 against the aussie, 1.50 against the kiwi and 1.41 against the loonie.

Looking ahead, U.S. labor market conditions index for February is set to be published in the New York session.

At 8:45 am ET, European Central Bank board member Sabine Lautenschlaeger is expected to speak in Dublin.