Investing.com - The euro was trading close to eight month lows against the dollar on Thursday as weak euro zone inflation data weighed and upbeat U.S. jobs data underpinned investor demand for the greenback.
EUR/USD was trading at 1.3387, after falling to session lows of 1.3372 earlier. The pair fell to a low of 1.3366 on Wednesday, the weakest since November 12.
The pair was likely to find support at around 1.3350 and resistance at 1.3425.
The dollar was boosted after the Labor Department reported that the U.S. employment cost index rose by 0.7% in the three months to June after a 0.3% increase in the first quarter. It was the fastest increase since September 2008. Economists had expected a 0.5% gain.
Wages rose by 0.6% in the second quarter the report said.
At the same time, the Labor Department said the number of people who filed for unemployment assistance in the U.S. last week rose by 23,000 to 302,000, while the previous week’s figure was revised down to a 14-year low of 279,000. Analysts had expected jobless claims to rise by 22,000 to 301,000.
A separate report showed that manufacturing activity in the Chicago-area expanded at a much slower rate than expected in July.
The reports came one day after official data showed that the U.S. economy rebounded more strongly than expected in the second quarter, fuelling speculation over the timing of a possible U.S. rate hike.
Investors were awaiting the U.S. nonfarm payrolls report for July on Friday, after the Federal Reserve said Wednesday that considerable slack still remains in the labor market despite recent improvements in jobs growth.
The euro remained under pressure after preliminary data released earlier on Thursday showed that the annual rate of inflation in the euro area slowed to a five year low of 0.4% in July from 0.5% in June. Economists had expected an unchanged reading.
Falling energy prices, as well as declines in the cost of food, alcohol and tobacco pushed down the inflation rate.
Core inflation, which excludes food and energy costs was unchanged at 0.8%.
The weak data added to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.
Another report showed that the unemployment rate across the euro area fell to 11.5% in June from 11.6% last month. It was the lowest rate since September 2012.
Elsewhere, the euro was almost unchanged against the yen, with EUR/JPY at 137.70.