The euro fell against the dollar before data that may show the jobless rate rose and retail sales declined in the countries that share the currency, bolstering speculation the European Central Bank will lower interest rates, Bloomberg reported.
The euro also traded near a three-week low versus the yen as derivatives showed investors are betting the ECB will lower its key rate by at least a quarter of a percentage point next week. The Australian dollar weakened against the U.S. currency after home building approvals in the country slumped.
"Disappointing economic data expose the euro to selling pressure," said Takeshi Tokita, vice president of foreign- exchange sales in Tokyo at Mizuho Corporate Bank, a unit of Japan's second-largest publicly traded lender. "The market is pricing in a rate cut and there is interest in selling the euro."
The euro fell to $1.3568 as of 9:45 a.m. in Tokyo from $1.3644 late yesterday in New York. It bought 125.90 yen from 126.42 yen. The dollar traded at 92.78 yen from 92.65 yen. The pound weakened to $1.5050 from $1.5095. The euro may decline to $1.3520 today, Tokita said.
The European unemployment rate increased to 7.8 percent in November from 7.7 percent in the previous month, according to a Bloomberg News survey of economists before the release of the data later today. A separate report due tomorrow will show retail sales in the 16 countries using the euro fell 1.7 percent in November from a year earlier after a 2.1 percent decline in the previous month, according to another survey.