Investing.com - The euro dropped against the dollar on Wednesday after an upbeat U.S. inflation report renewed sentiments that the Federal Reserve remains on track to close its monthly bond-buying program next week and hike interest rates next year.
In U.S. trading, EUR/USD was down 0.41% at 1.2665, up from a session low of 1.2647 and off a high of 1.2740.
The pair was likely to find support at 1.2623, last Wednesday's low, and resistance at 1.2840, Tuesday's high.
The U.S. Labor Department reported earlier that consumer prices rose 0.1% in September, meeting estimates and following a 0.2% decline in August, which sent investors flocking to the greenback.
Core consumer prices, which exclude food and energy costs, rose 0.1% in September, disappointing expectations for a 0.2% gain. Core consumer prices were flat in August, though the overall report confirmed market expectations for the Federal Reserve to make monetary policy less accommodating going forward.
The euro, meanwhile, continued to come under pressure after Reuters reported earlier this week that the European Central Bank may purchase corporate debt to boost slowing inflation rates in the euro area and kick start recovery.
The report said the bank could activate the new stimulus plan as soon as December and begin bond purchases by early next year.
The ECB began purchasing covered bonds on Monday in a bid to increase liquidity in the region, and talk of fresh stimulus programs softened the euro.
An ECB spokesperson said no decision had been taken but the report was seen as an indication that the bank is moving closer to purchasing government debt.
Reports by Spanish news agency Efe that at least 11 European banks are set to fail ECB stress tests this weekend also hit demand for the euro.
The ECB was to announce the results of stress tests on 130 banks on Sunday.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.19% at 0.7877, and down against the yen, with EUR/JPY down 0.17% at 135.82.
On Thursday, the euro zone is to publish preliminary data on private-sector manufacturing and service-sector activity.
The U.S. is to publish its weekly report on initial jobless claims.
Investing.com offers an extensive set of professional tools for the financial markets.
Read more News on Investing.com and download the new Investing.com apps for Android and iOS!
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.