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EUR/USD Finds Support Despite Eurozone Inflation Woes

H.S. Borji
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EUR/USD Finds Support Despite Eurozone Inflation Woes

The euro was trading higher Monday, as the forex market absorbed disappointing Eurozone inflation data ahead of an active week of trade headlined by the Federal Reserve monetary policy meetings.

Eurozone inflation eased back to rate-cut levels, official data from the European Commission showed today. Consumer price inflation in February rose at an annual rate of 0.7 percent, the same level that prompted the European Central Bank to slash interest rates last November. The so-called core measure rose 1 percent annually, official data showed.

In the United States, industrial production rebounded strongly last month, led by the biggest surge in manufacturing output since last August. Meanwhile, homebuilder sentiment remained largely negative this month, according to the National Association of Home Builders.

The Federal Reserve is expected to make headlines this week when it meets in Washington to discuss monetary policy. Since December, the Fed has reduced its monthly bond buying program by $20 billion. Policymakers are likely to discuss whether the broad slowdown this winter was due to inclement weather or some other underlying trend.

The EURUSD pair jumped to a high of 1.3946 at the start of the North American session. The pair, having gained more than 1 percent since mid-February, remained supported above the 1.39 handle. As of 18:45 GMT, the pair was trading at 1.3922, a gain of 17 pips.

The euro also had the upper hand on the British pound. The EURGBP pair traded within a narrow range of 0.8342-0.8379. As of 18:45 GMT, the pair was trading at 0.8370, a gain of more than 0.1 percent.

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