Euro Weakens As Inflation Concerns Mount

The euro fell against its major counterparts in the European session on Tuesday amid a drop in European shares, as a record high inflation in the euro area intensified fears that the European Central Bank is likely to act aggressively to tame price pressures.

Flash data from Eurostat showed that Eurozone inflation accelerated further in May on surging energy and food prices.

Inflation rose to a fresh record 8.1 percent in May from 7.4 percent in April. The rate was forecast to climb to 7.7 percent.

The ECB meeting is due next week, with policy makers preparing to end the asset purchase program and back a rate hike in July.

The European Union agreed to ban oil imports from Russia into member states, with a temporary exception for pipeline oil in response to the war in Ukraine.

The euro fell to a 5-day low of 1.0689 against the greenback, following a high of 1.0779 set at 6 pm ET. If the euro slides further, 1.04 is possibly seen as its next support level.

The euro declined to 1.0260 against the franc and 0.8490 against the pound, down from an early session's high of 1.0336 and a 5-day high of 0.8529, respectively. The currency is seen finding support around 1.00 against the franc and 0.83 against the pound.

The euro retreated from an early 3-week high of 137.99 against the yen and a 4-day high of 1.6479 against the kiwi and edged down to 136.80 and 0.8490, respectively. On the downside, 133.00 and 1.62 are possibly seen as its next support levels against the yen and the kiwi, respectively.

The euro slipped to near a 4-week low of 1.4876 against the aussie and an 8-day low of 1.3547 against the loonie, falling from its prior highs of 1.4992 and 1.3642, respectively. The currency is likely to find support around 1.45 against the aussie and 1.34 against the loonie.

Looking ahead, Canada GDP data for the first quarter, U.S. FHFA's house price index and S&P/Case-Shiller home price index for March and consumer confidence index for May will be featured in the New York session.