Forex - Euro broadly lower with ECB meeting in focus

The euro fell to almost four week lows against the yen on Tuesday and was also lower against the dollar and the pound as speculation that the European Central Bank may cut rates intensified ahead of Thursday’s upcoming policy meeting.

EUR/JPY hit 132.38 during European morning trade, the lowest since October 10; the pair subsequently consolidated at 132.54, shedding 0.55%.

The pair was likely to find support at 131.59, the low of October 10 and resistance at 133.31, the session high.

The euro came under broad selling pressure after data last week showing that euro zone annual inflation fell to a four year low in October raised concerns that the bank might cut rates in order to safeguard the economic recovery in the region.

While no policy change was expected from the ECB on Thursday many investors expected the bank to signal the possibility of further monetary policy easing at its meeting in December.

The European Commission cut its forecast for euro zone growth on Tuesday and said that unemployment in the region remains at unacceptably high levels.

The EC said it now expects economic growth of 1.1% in 2014 down from 1.2% and said the growth rate is expected to rise to 1.7% in 2015.

Meanwhile, data showed that euro zone producer price inflation was down 0.9% from a year earlier in September, compared to expectations for a 0.7% decline.

The euro was lower against the dollar, with EUR/USD down 0.19% to 1.3489.

Sentiment on the dollar was hit after comments by Federal Reserve officials on Monday indicated that the bank is likely to keep its stimulus program in place for some time to come.

Federal Reserve Bank of Boston President Eric Rosengren said bank should keep its asset purchase program in place until there is "compelling evidence of a sustainable recovery making satisfactory progress toward full employment."

Elsewhere, the euro dropped to five-week lows against the pound, with EUR/GBP falling 0.66% to 0.8407.

Sterling strengthened across the board after data on Tuesday showed that activity in the dominant U.K. services sector expanded at the fastest rate in 16 years in October, bolstering the outlook for the economic recovery.

Markit said the U.K. services purchasing managers index rose to 62.8 in October up from 60.3 in September, the sharpest rise in activity since May 1997. Economists had been expecting the index to tick down to 59.8.