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Forex - EUR/USD slides lower after E.Z. inflation report

ForexDec 17, 2014 07:52AM ET
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Euro declines against dollar as inflation data disappoints - The euro was lower against the U.S. dollar on Wednesday, after data showed that euro zone consumer prices fell in line with expectations last month, while markets eyed the Federal Reserve's upcoming policy statement.

EUR/USD hit 1.2446 during European afternoon trade, the session low; the pair subsequently consolidated at 1.2459, declining 0.42%.

The pair was likely to find support at 1.2382, the low of December 12 and resistance at 1.2571, Tuesday's high and a one-month high.

Official data earlier showed that consumer price inflation in the euro zone fell 0.2% in November, in line with market expectations, after a flat reading in October.

The bloc's CPI rose at an annualized rate of 0.3% last month, unchanged from October.

Core CPI in the euro zone, which excludes food, energy, alcohol and tobacco, ticked down 0.1% in November.

The data fuelled further concerns over persistently low levels of inflation in the euro area. The European Central Bank targets an inflation rate of close to, but just below 2%.

The single currency hit one-month highs against the dollar on Tuesday after data showed that the closely watched ZEW index of German economic sentiment improved to its highest level since May this month.

However, the report was offset by survey data showing that euro zone private sector activity grew at a picked up slightly in December after falling to a 16 month low last month, but the rate of expansion was still one of the weakest seen over the past year.

Meanwhile, investors remained cautious ahead of the Federal Reserve's policy statement due later in the day, as ongoing speculation over the prospects for a U.S. rate hike next year have fuelled expectations that the U.S. central bank could adjust its forward guidance.

The euro was also lower against the pound, with EUR/GBP edging down 0.18% to 0.7930.

In the U.K., the Office for National Statistics reported on Wednesday that the unemployment rate held steady at 6.0% in the three months to October, compared to expectations for a tick down to 5.9%.

The number of people in the U.K. claiming unemployment benefits fell by 26,900 last month, compared to expectations for a decline of 21,200. October’s figure was revised to a drop of 25,100 people from a previously reported decline of 20,400.

Later in the day, the U.S. was to release data on consumer inflation and the current account.

Forex - EUR/USD slides lower after E.Z. inflation report

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