Investing.com - The euro dropped to a 26-month low against the U.S. dollar on Friday, as strong U.S. economic reports lent further support to the greenback, while ongoing concerns over the outlook for growth in the euro zone dampened demand for the single currency.
EUR/USD hit 1.2486 during U.S. morning trade, the pair's lowest since August 2008; the pair subsequently consolidated at 1.2510, retreating 0.81%.
The pair was likely to find support at 1.2132 and resistance at 1.2640, Thursday's high.
The dollar strengthened further after the University of Michigan said in a preliminary report that its consumer sentiment index rose to a seven-year high of 86.9 this month from 86.4 in September. Analysts had expected the index to remain unchanged.
In addition, data showed that the Chicago purchasing managers' index rose to a three-and-a-half year high of 66.2 in October from 60.5 in September, confounding expectations for a reading of 60.0.
The reports overshadowed earlier data showing that personal spending fell 0.2% last month, disappointing expectations for a 0.1% rise, after an increase of 0.5% in August.
U.S. personal income rose 0.2% in September, less than the expected 0.3% gain, after a 0.3% advance the previous month.
In the euro zone, official data showed that consumer price inflation rose at an annualized rate of 0.4% this month, in line with expectations, up from 0.3% in September.
The rate has now been below 1% for 13 straight months, well under the European Central Bank's target of near but just under 2%.
Core CPI, which excludes food, energy, alcohol, and tobacco, rose at an annualized rate of 0.7% in October, down from 0.8% from the previous month and compared to expectations for a reading of 0.8%.
A separate report showed that the euro zone's unemployment rate remained unchanged at 11.5% last month, as markets had anticipated.
Data also showed that German retail sales dropped 3.2% last month, compared to expectations for a 1.0% fall. August's figure was revised to a 1.5% increase from a previously estimated 2.5% rise.
The euro was lower against the pound, with EUR/GBP declining 0.62% to 0.7835.