Investing.com - The euro dipped against dollar on Wednesday, giving back earlier gains though held steady after a soft U.S. consumer price index and expectations for the Federal Reserve to hold off on signaling when interest rates may rise prompted investors to avoid the greenback.
In U.S. trading, EUR/USD was down 0.06% at 1.2956, up from a session low of 1.2943 and off a high of 1.2981.
The pair was likely to find support at 1.2907, Monday's low, and resistance at 1.2994, Tuesday's high.
The Federal Reserve later in the session will release its latest statement on monetary policy, with investors in standby mode ahead of time.
The dollar slipped against the euro earlier on soft consumer inflation data, though the single currency gave back gains on uncertainty over whether or not the U.S. central bank will hint at when benchmark interest rates will rise.
The U.S. central bank is expected to cut its monthly bond-buying program to $15 billion from $25 billion, though investors backtracked on expectations for a rate-hike timetable, with sentiments brewing that the Fed will seek to avoid overwhelming markets by discussing the end of stimulus programs alongside a change in forward guidance, leaving the latter for a future policy meeting.
Earlier Wednesday, the Labor Department reported that the U.S. consumer price index fell 0.2% in August, pulling the annual rate of inflation down to 1.7% from 1.9% in July.
Analysts were expecting the CPI rate to rise 0.1%.
The unexpected slowdown in inflation was due to falling energy prices the report said. Energy prices fell by 2.4% last month, including a 4.1% drop in gasoline prices.
Separately, the National Association of Home Builders/Wells Fargo said that its Housing Market Index increased to an almost nine-year high of 59.0 this month from 55.0 in August, above expectations for a reading of 56.0.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.35% at 0.7936, and up against the yen, with EUR/JPY up 0.31% at 139.27.
In a report, the U.K. Office for National Statistics said that the claimant count fell by 37,200 last month, compared to expectations for a decline of 30,000 people. July’s figure was revised to a drop of 37,400 people from a previously reported decline of 33,600.
The report also showed that the rate of unemployment declined to 6.2% in the three months to July, the lowest level since December 2008, compared to expectations for a reading of 6.3% and down from 6.4% in the three months to June.
The pound firmed against most major currencies after polls showed that support for Scottish independence may be slipping, though the race is still neck-and-neck ahead of Thursday's referendum.
On Thursday, the U.S. is to produce a flurry of economic data, including reports on initial jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.
Markets will also track Scotland's referendum on independence.