The euro dropped against its most major counterparts in the European session on Wednesday, as European shares weakened amid mixed earnings reports and weak oil prices, while investors awaited the European Central Bank decision tomorrow for more hints about its future policy outlook.

The central bank is expected to leave its main refinance rate, marginal lending rate and deposit facility rate unchanged at 0 percent, 0.25 percent and -0.4 percent, respectively. The bond buying program worth 30 billion euros per month will continue until at least September.

Economists do not expect any major changes in policy, given the euro's recent rise and subdued inflation.

No major changes in forward guidance is expected as policy makers need more time to assess the outlook for the economy and the euro.

Oil prices fell after an industry data showed a build in oil inventories last week.

Data from the American Petroleum Institute showed that the crude inventories rose 4.8 million barrels to 416.2 million in the week to January 19.

The ECB President Mario Draghi said that the recent movements in the euro reflect a side-effect of policy and not its objective.

"While purchases under the asset purchase programme have been effective in easing financing conditions at large and supporting the recovery in the origination of loans to firms and households, they have not led to statistically significant euro exchange rate movements," Draghi said in a letter to a member of the European Parliament.

Flash data from IHS Markit showed that Eurozone private sector activity expanded at the fastest pace in nearly 12 years in January.

The composite output index rose unexpectedly to 58.6 from 58.1 in December. The expected reading was 57.9. This was the highest since June 2006.

The euro was trading mixed in the Asian session. While it dropped against the yen and the franc, it held steady against the pound. Against the greenback, the currency rose.

The euro dropped to 0.8740 against the pound, its lowest since December 8, 2017. Continuation of the euro's downtrend may lead it to a support around the 0.86 region.

Data from the Office for National Statistics showed that the UK unemployment rate held steady at the lowest level seen since 1975

The jobless rate came in at 4.3 percent in three months to November, the same rate as in three months to August, and in line with expectations.

The European currency slipped to near a 2-week low of 134.94 against the yen, compared to 135.65 hit late New York Tuesday. On the downside, 133.00 is possibly seen as the next support for the euro.

Final data from the Cabinet Office showed that Japan's leading index climbed less than estimated in November but remained at the highest level in nearly four years.

The leading index, which measures the future economic activity, rose to 108.3 in November from 106.5 in October.

Pulling away from an early high of 1.1781 against the Swiss franc, the euro declined to a 5-day low of 1.1728. The euro is seen finding support around the 1.16 mark.

The euro slid to a 5-day low of 1.5211 against the loonie, 2-day low of 1.5279 against the aussie and near a 2-week low of 1.6651 against the kiwi, off its early highs of 1.5300, 1.5399 and 1.6742, respectively. The next possible support levels for the euro may be seen around 1.65 against the kiwi and 1.51 against both the loonie and the aussie.

On the flip side, the euro held steady against the greenback, after having advanced to more than a 3-year high of 1.2356 at 4:30 am ET. The pair closed Tuesday's deals at 1.2298.

Looking ahead, U.S. house price index for November, existing home sales for December and Markit's U.S. manufacturing PMI for January are set for release in the New York session.

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