(MENAFN- FxPro) EUR/USD posted modest gains on Wednesday to halt a two-day losing streak, amid soft inflation data on both sides of the Atlantic.
The disappointing data from last month was released ahead of Federal Reserve chair Janet Yellen's highly-anticipated press conference on Thursday, where the Fed could announce plans to raise its benchmark Federal Funds Rate for the first time in more than nine years. The rate, which banks use to lend to other institutions on overnight loans, has remained at its current level between zero and 0.25% since December, 2008.
EUR/USD wavered between 1.1214 and 1.1321 on Wednesday, before settling at 1.1288, up 0.0017 or 0.20%. The euro has gained nearly 1.75% in value against the American dollar over the last month of trading. On Monday, the pair halted an eight-day winning streak when it fell mildly to close around 1.132.
EUR/USD likely gained support at 1.1015, the low from August 18 and was met with resistance at 1.1625, the high from Aug. 25.
On Wednesday morning, the U.S. Bureau of Labor Statistics (BLS) said its Consumer Price Index (CPI) for August fell by 0.1% on a monthly basis, amid sharp declines in energy and airfare prices. Analysts expected monthly CPI to remain unchanged from its July level. On a year-over-year basis, the Consumer Price Index increased by 0.2% following a 0.2% gain last month.
Core CPI, which strips out food and energy prices, also experienced muted gains. In August, Core CPI increased by 0.1% on a monthly basis, below analysts' expectations for a 0.2% gain. Over the last 12 months, the core reading is up by 1.8% - following a similar yearly increase in July. The reading falls slightly below the Fed's long-term targeted goal of 2% inflation. In July, the Core PCE Index, the Fed's preferred gauge for long-term inflation, stood at 1.2%.
Last month, Fed vice chairman Stanley Fischer indicated that there is good reason to believe that inflation will move higher as the temporary forces restraining it from a stronger dollar and falling energy prices continue to "dissipate further."
Elsewhere, the European Union revised consumer prices downward by 0.1% in August, underscoring widespread concerns stemming from the global energy rout. Inflation in the euro zone has virtually evaporated since the start of a ‚¬1.1 trillion bond-buying program in March. Also on Wednesday, the Organization for Economic Co-Operation and Development (OECD) also cut its economic growth forecasts for next year from 2.1 to 1.9%.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.40% on Wednesday to an intraday low of 95.30, before rising to 95.50 at the close of trading.
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