Investing.com - The euro slid as investors flocked to safe-haven dollar positions on Wednesday ahead of the Federal Reserve's statement on interest rates and monetary policy.
In U.S. trading, EUR/USD was down 0.85% at 1.2405, up from a session low of 1.2388 and off a high of 1.2515.
The pair was likely to find support at 1.2245, the low from Dec. 8, and resistance at 1.2571, Tuesday's high.
The Federal Reserve is not seen raising interest rates until 2015, but many investors bet Wednesday's statement will scrap language suggesting that borrowing costs will remain low for a considerable amount of time, which gave the greenback support.
Investors shrugged off lackluster inflation data.
The Department of Labor reported earlier that the U.S. consumer price index fell 0.3% last month, outpacing estimates for a decline of 0.1% and down from a flat reading in October.
Consumer prices were 1.3% higher on a year-over-year basis, just shy of expectations for a 1.4% reading after a 1.7% increase in October.
Core consumer inflation, which strips out volatile food and energy components, was up 0.1% from a month earlier and rose at an annual rate of 1.7%. Economists had forecast a monthly increase of 0.1% and an annual gain of 1.8%.
The data did little to sway widespread market expectations for U.S monetary policy to grow less accommodative while Europe moves in the opposite direction.
Eurostat, the statistical office of the European Union, reported earlier that consumer price inflation in the euro zone fell 0.2% in November, in line with market expectations, after a flat reading in October.
The bloc's CPI rose at an annualized rate of 0.3% last month, unchanged from October and also in line with expectations.
Core CPI in the euro zone, which excludes food, energy, alcohol and tobacco, ticked down 0.1% in November, in line with expectations.
The data fueled ongoing concerns that European inflation rates remain soft, as the European Central Bank targets an inflation rate of just below 2%.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.23% at 0.7926, and up against the yen, with EUR/JPY up 0.03% at 145.71.
On Thursday, the Ifo Institute is to release a report on German business climate.
The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.