The euro traded lower against its major counterparts in the European session on Monday, as concerns over additional tightening of monetary policy by the Federal Reserve overshadowed optimism about the debt ceiling deal.

Strong U.S. economic data released last week boosted the case for further monetary policy tightening in June.

Fed funds futures indicate a 60.7 percent chance of a 25 basis point hike next month.

In the U.S., President Joe Biden and House Speaker Kevin McCarthy reached a deal to raise the nation's debt limit and avert a potential default, following weeks of intense talks.

The bipartisan deal now heads to Congress, which will need to pass the agreement before the government starts running out of money.

The euro fell to a 7-1/2-month low of 0.9675 against the franc and a 4-day low of 0.8675 against the pound, off its early highs of 0.9717 and 0.8694, respectively. Next key support for the currency is likely seen around 0.955 against the franc and 0.84 against the pound.

The euro dropped to 1.0708 against the greenback, 1.7666 against the kiwi and 150.09 against the yen, reversing from its early highs of 1.0743 and 1.7750 and a multi-week high of 151.07, respectively. The euro may locate support around 1.05 against the greenback, 1.74 against the kiwi and 141.00 against the yen.

The euro weakened to 5-day lows of 1.4553 against the loonie and 1.6372 against the aussie, from its early highs of 1.4603 and 1.6445, respectively. The next possible support for the currency is seen around 1.44 against the loonie and 1.61 against the aussie.

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