CANBERA (Alliance News) - The euro declined to multi-week lows against the US dollar and the pound on Friday after the Standard & Poor's lowered the sovereign ratings of the EU from 'AAA' on deterioration in overall creditworthiness of member states. The agency said EU budgetary negotiations have become more contentious, signaling that there is rising risks to the support of the EU from some member states. The long-term ratings were lowered to 'AA+', while it affirmed short-term credit rating at 'A-1+'. The 'stable' outlook reflects the assessment that the risks to long-term rating on the EU are balanced. Meanwhile, German consumer confidence is set to rise to its highest level in more than six years in January, a survey by market research group GfK revealed today. The forward-looking consumer climate index for January rose to 7.6 in from 7.4 in December. Economists had forecast the index to remain at the December level. Trading in Asia was impacted by China's rising money market rates even though the Chinese central bank injected short term liquidity to the market yesterday. The euro fell to 0.8331 against the pound, a level not seen since December 5. The euro is likely to face support around the 0.825 zone. The euro that climbed to 142.60 against the yen previously pared gains shortly thereafter. The euro may eye support at the 141.00 zone. The Bank of Japan today decided to retain its monetary easing plan unchanged and reiterated that the economy is recovering moderately. At the end of a two-day meeting of the nine-member Policy Board, led by Governor Haruhiko Kuroda, the central bank said it will keep the target of the monetary base expansion at an annual pace of JPY 60-70 trillion. The euro depreciated to 1.3626 against the pound, lowest since December 6. Next key support level for the euro may be eyed around 1.35. An index measuring consumer sentiment in the UK was down for the third consecutive month, the latest survey from GfK revealed today - showing a score of -13. That missed forecasts for -11 after coming in at -12 in November. The single currency hit a 1-week low of 1.4536 against the Canadian dollar and a 4-day low of 1.5344 against the aussie, down from Thursday's closing values of 1.4566 and 1.5417, respectively. Further decline could lead the euro to test support around 1.446 against the loonie and 1.52 against the aussie. Meanwhile, the euro rebounded modestly against the franc after falling to 1.2251 at 12:30 am ET. At Thursday's close, the pair was quoted at 1.2269. Looking ahead, the final UK third quarter GDP data and public finances for November, as well as Eurozone flash consumer confidence index for December are due shortly. Canadian CPI for November and retail sales for October, along with US final GDP data for the third quarter may influence trading in the New York session.

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