Forex - Euro remains lower after euro zone inflation report

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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 1.3570.

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 estimate.

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 area.

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 growth.

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 last week.

Elsewhere, the common currency fell to fresh one-a-half year lows against the pound on Monday, with EUR/GBP down 0.23% to 0.7963.

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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This article appears in: Investing , Forex and Currencies

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