Investing.com - The euro stayed close to four month lows against
the dollar on Monday after data confirmed that the annual rate of
inflation in the euro zone remained unchanged at a four-and-a-half
year low in May.
EUR/USD was down 0.10% to 1.3528, not far from the four month
trough of 1.3502 struck earlier this month.
The pair was likely to find support at 1.3500 and resistance at
Eurostat reported that the monthly rate of inflation in the euro
zone fell 0.1% in May, in line with forecasts, while the annual
rate of inflation was 0.5%, unchanged from the preliminary
It was the lowest annual rate of inflation since November 2009,
with the exception of March of this year.
Core inflation, which strips out volatile items such as energy
and food, was unrevised at 0.7%, matching the record set in March
of this year and December 2013.
The European Central Bank targets an annual inflation rate of
close to but just under 2%.
Earlier this month the ECB cut rates to record lows and imposed
negative rates on commercial lenders for the first time, in order
to combat the threat of persistently low inflation in the euro
Demand for the dollar continued to be underpinned as concerns
over the ongoing Sunni insurgency in Iraq bolstered safe haven
demand, amid fears over the impact of reduced oil supply on global
The euro was lower against the stronger yen, with EUR/JPY down
0.18% to 137.92, close to the four month low of 137.71 set late
Elsewhere, the common currency fell to fresh one-a-half year
lows against the pound on Monday, with EUR/GBP down 0.23% to
Sterling has strengthened broadly, briefly rising above the 1.70
level against the dollar for the first time since August 2009 on
Monday, after Bank of England Governor Mark Carney warned last week
that U.K. interest rates could rise sooner than expected.
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