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Forex - EUR/USD falls to 8-month lows on upbeat U.S. inflation data

Published 07/22/2014, 12:00 PM
Updated 07/22/2014, 12:02 PM
Dollar firms over euro as U.S. inflation numbers point to uptick in the U.S. economy

Dollar firms over euro as U.S. inflation numbers point to uptick in the U.S. economy

Investing.com - The euro slid to eight-month lows against the dollar on Tuesday after data revealed consumer price inflation in the U.S. met expectations in June, which sent investors betting the Federal Reserve may raise interest rates sooner in 2015 than later, especially if the labor market continues to improve.

In U.S. trading, EUR/USD was down 0.41% at 1.3469, up from a session low of 1.3460 and off a high of 1.3549.

The pair was likely to find support at 1.3399, the low from Nov. 21, 2013, and resistance at 1.549, the earlier high.

The Labor Department reported earlier that the U.S. consumer price index rose 2.1% in June, unchanged from the previous month and in line with forecasts, which drew applause for the dollar.

On a month-over-month basis, U.S. consumer prices were up 0.3% after a 0.4% increase in May, also in line with expectations.

Figures that met but did not exceed Wall Street expectations bolstered the dollar, as un upside surprise could have rattled nerves and sent many investors rethinking what the Federal Reserve will do with monetary policy.

Market talk points to the Fed ending its bond-buying program around October and then raising interest rates some time in 2015, though the length of time that will pass between those two policy moves remains up in the air.

June's core inflation rate, which excludes food and energy costs, rose by just 0.1% from May and 1.9% on year, slightly below market calls for 0.2% and 2.0% readings, respectively, which illustrated how gasoline was driving the CPI up, though markets viewed the numbers as fundamentally healthy anyway.

Elsewhere, the National Association of Realtors reported earlier that existing U.S. home sales rose 2.6% to 5.04 million units in June from 4.91 million in May, beating market forecasts for a 2.0% rise to 4.97 million units.

The euro, meanwhile, continued to soften over ongoing market sentiments that the European Central Bank has room to loosen policy if needed.

Elsewhere, the euro was down against the pound, with EUR/GBP down 0.30% at 0.7896, and down against the yen, with EUR/JPY down 0.27% at 136.75.

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