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The euro declined broadly on Friday as weakness in the euro zone economy becomes more apparent, while the US dollar advanced after investors turned cautious over a slowdown in China.

The single currency was down 0.7 percent to 1.1276, having lost half a percent to 1.1285 against the greenback, its lowest in two weeks.

The euro simply lacks domestic catalysts for a more meaningful rally, according to analysts.

Against the Swiss franc, the single currency also dropped 0.4 percent to 1.1249.

The euro came under pressure on Thursday after the European Central Bank (ECB) lowered expectations for economic growth and inflation.

The currency’s fall was modest, but it reinforced worries about an economic slowdown and the central bank’s caution as its bond-buying scheme comes to an end and tries to wean the region off stimulus.

The German data and French business activity on Friday added to concerns about sluggish expansion in the euro area. The report showed growth in Germany’s private sector slowed to a four-year low in December, while business activity in France unexpectedly contracted.

Frankfurt-based currencies strategist Thu Lan Nguyen said the ECB meeting was seen as rather dovish, and now the hard data, support the view that the risk are moving to the downside.

The central bank has stated that it intends to leave rates at the lowest possible levels through the summer of next year, although Nguyen does not see the ECB tightening policy until 2020 as a weaker economy gives it a reason to keep the stimulus taps running.

Dollar Gains Ahead of Fed Meeting

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The dollar rose on Friday, driven by weak economic data in China, and the as euro as well as the British pound traded in the red territory the latter due to renewed worries over UK’s departure from the European Union (EU).

The US dollar index, a gauge of the greenback’s strength against a basket of six major currencies, gained 0.6 percent to $97.683. The currency is on track for its best weekly performance since August.

The yen was little changed at 113.66 per dollar.

Also providing further optimism on the dollar is the upcoming two-day monetary policy meeting of the Federal Reserve, at which it is widely expected to hike rates for a fourth time this year.

For 2019, investors remain uncertain of the number of rate increases, after dovish remarks from Fed officials who have suggested that interest rates are nearing a neutral range where they do not encourage or restrain economic growth.

The Chinese yuan, meanwhile, slipped after data showed retail sales grew in November at their slowest since 2003 and industrial output registered the least gain in almost three years. The dollar advanced 0.4 percent to 6.9103 against the yuan.

The Australian dollar, regarded as a measure of sentiment towards China, which is Australia’s biggest trading partner, fell 0.9 percent to 0.7156.

The pound tumbled 0.7 percent to 1.2542 against the greenback as traders grew concerned about British Prime Minister Theresa May having trouble with securing assurances from the EU over her Brexit deal.

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