16.10.201703:52:00UTC+00Euro Drops After Weekly Gain as Catalonia Deadline Approaches

The euro fell on Monday after marking its largest weekly gain in a month while traders took profit, although markets were cautious of chasing the currency lower ahead of the European Central Bank policy meeting set next week.

Political uncertainty also persists in the form of an approaching deadline over Catalonia's bid for independence and Austria's election results, investors eventually moved to the sidelines.

The common currency dropped 0.3 percent to $1.1780 in early trading. It climbed 0.8 percent the previous week, its largest weekly gain in a month, according to Thomson Reuters.

Catalan leader Carles Puigdemont has until 10:00 a.m. local (0800 GMT) today to clarify whether he is calling for the region's independence from Spain.

The euro's losses were pared amid a muted dollar as subdued inflation data increased expectations the U.S. Federal Reserve will not deliver an overtly hawkish tone at its policy meeting at the end of October.

The dollar index increased 0.1 percent to 93.21, lacking momentum after declining last week.