EURJPY Euro vs Japanese Yen

The euro fell against its key counterparts in early European deals on Thursday, as European shares followed Asian shares lower, after political uncertainty in Washington stoked concern about the ability of the U.S. President Donald Trump to push through his reform agenda.

Besieged from all sides, the Trump administration appointed former FBI Director Robert Mueller as a special counsel to oversee the federal investigation into Russia's involvement in the U.S. presidential election last year.

That followed a report from The New York Times that former FBI Director James Comey had composed a memorandum recording the President's request to drop an investigation of Michael Flynn, the former national security adviser.

With Trump facing the threat of impeachment, traders fear that the agenda of tax cuts and deregulation could be delayed.

The German yields also fell, with the benchmark yield on 10-year note falling 0.33 percent. Yields move inversely to bond prices.

In an interview, the European Central Bank member Benoit Coeure told that the bank should be prepared to alter its monetary policy stance when economic conditions improve, or else that would result in a financial setback once it begins policy normalisation.

"Too much gradualism in monetary policy bears the risk of larger market adjustments when the decision is eventually taken," Coeure added.

The euro showed mixed performance against its major rivals in the Asian session. While the euro rose against the greenback and the yen, it held steady against the pound and the franc.

The euro hit near a 2-week low of 122.93 against the yen, down from an early high of 124.11. If the euro-yen pair extends slide, 122.00 is likely seen as its next support level.

Preliminary data from the Cabinet Office showed that Japan's gross domestic product gained 0.5 percent on quarter in the first three months of 2017.

That was in line with expectations and up from 0.3 percent in the previous three months.

The single currency reversed from an early high of 0.8610 against the pound, edging down to a 2-day low of 0.8535. The next possible support for euro is seen around the 0.845 region.

Figures from the Office for National Statistics showed that UK retail sales recovered at a faster than expected pace in April.

Retail sales volume including auto fuel grew 2.3 percent month-on-month, reversing a 1.4 percent drop in March. This was the fastest growth since January 2016, and above the expected rate of 1.1 percent.

The euro pared gains to 1.0893 against the Swiss franc, from a high of 1.0928 hit at 6:15 pm ET. Continuation of the euro's downtrend may see it challenging support around the 1.08 mark.

The euro retreated to 1.1120 against the greenback, from an early 6-month high of 1.1172. On the downside, the euro is likely target 1.10 as the next support level.

The euro slipped to a 2-day low of 1.6024 against the kiwi, compared to 1.6073 hit late New York Wednesday. The euro is seen finding support around the 1.58 area.

Looking ahead, the U.S. weekly jobless claims for the week ended May 13, leading indicators for April and Philadelphia Fed manufacturing survey for May are slated for release in the New York session.

At 8:30 am ET, the European Central Bank executive board member Yves Mersch gives keynote address at Government Borrowers Forum hosted by the European Stability Mechanism and the Ministry of Finance of Luxembourg in Luxembourg.

At 8:45 am ET, the European Central Bank executive board member Sabine Lautenschläger speaks at the IBF Board meeting organised by Bundesverband deutscher Banken in Berlin, Germany.

The European Central Bank President Mario Draghi speaks at the Tel Aviv University in Tel Aviv, Israel, at 1:00 pm ET.

Cleveland Fed President Loretta Mester speaks on economy and monetary policy before the Economic Club of Minnesota at 1:15 pm ET.

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