- The euro edged lower against the dollar on Thursday ahead of the European Central Bank’s rate review later in the trading day, as concerns over the risk of deflation in the euro area continued to weigh.

EUR/USD was down 0.09% to 1.3520, from 1.3532 on Wednesday.

The pair was likely to find support at 1.3476, last Friday’s low and a ten-week low and resistance at 1.3572, last Friday’s high.

Investors remained cautious ahead of the ECB meeting amid speculation that the bank may tighten monetary policy in order to stave off deflation and shore up the fragile recovery in the region.

Data last week showed that the annual rate of inflation in the euro zone slowed to 0.7% in January. It was the fourth consecutive month the inflation rate came in at less than 1% and was well below the ECB’s target of 2%. The ECB unexpectedly cut rates to a record low 0.25% when inflation fell to a four-year low of 0.7% in October.

The euro also slid lower against the yen, with EUR/JPY dipping 0.08% to 137.19.

Elsewhere, the dollar was little changed against the yen, with USD/JPY edging up 0.03% to 101.47, holding above the 11-week lows of 100.74 struck on Tuesday.

Safe haven demand for the yen continued to remain supported in the wake of a recent selloff in emerging markets. Investors were also turning their attention to Friday’s U.S. nonfarm payrolls report for January.

Data released on Wednesday showed that the U.S. service sector expanded at the fastest rate in four months in January, while another report showed that the U.S. private sector added 175,000 jobs in January, below expectations for jobs growth of 180,000.

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