Investing.com - The euro stayed supported above 10-week lows against the dollar on Tuesday after data showing that euro zone consumer prices remained in negative territory this month, though the rate of deflation eased.
EUR/USD was last at 1.1131, holding above the 10-week trough of 1.1097 set on Monday.
Eurostat reported that the flash estimate showed that consumer prices in the single currency bloc fell 0.1% on a year-over-year basis in May, in line with economists’ expectations after falling 0.2% in April.
The European Central Bank targets inflation of close to, but just below 2%.
The decline in inflation was due in large part to lower oil prices, Eurostat said.
Energy prices fell by 8.1% in May from a year earlier, slowing from an 8.7% fall in April.
Core inflation, which strips out energy and food costs, rose by 0.8% in May from 0.7% in April.
A separate report showed that the euro area’s unemployment rate came in at 10.2% in April, unchanged from the previous month.
Demand for the dollar continued to be underpinned after U.S. central bank chief Janet Yellen said Friday it would be appropriate for the Federal Reserve to raise rates “gradually and cautiously” in the coming months if the economy and the labor market continue to pick up as expected.
The Fed hiked interest rates in December for the first time in almost a decade.
Higher rates are positive for the dollar because they make the U.S. currency more attractive to yield-seeking investors.
Investors were turning their attention to Friday’s U.S. nonfarm payrolls report for May for fresh indications on the strength of the labor market.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.74, just below Monday’s highs of 95.96, the most since March 29.