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EUR/USD Tumbles amid Flurry of Data

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EUR/USD Tumbles amid Flurry of Data

The EURUSD was trading lower Tuesday, as a flurry of economic data shifted the tide in favour of the US dollar.

Several batches of Eurozone data made their way through the financial markets Tuesday. The common currency was firmer after German consumer confidence posted another sharp reading. GfK’s gauge of German consumer confidence was unchanged at 8.5, matching forecasts.

German inflation data disappointed investors, with the national consumer price index advancing below estimates. German CPI declined 0.2 percent in April, the Federal Statistics Office reported today. Year-on-year, consumer inflation rose 1.3 percent after rising 1 percent annually the previous month.

CPI data for the broader Eurozone will be released Wednesday.

The European Central Bank has been under considerable scrutiny in recent months as Eurozone inflation continues to deteriorate. Faced with six consecutive months of below 1 percent inflation, the ECB may be forced to slash interest rates to zero or consider Federal Reserve-style monetary easing. ECB Governing Council member Jens Weidmann confirmed last month the central bank was considering implementing quantitative easing to stimulate the Eurozone economy.

The EURUSD fell to a session low of 1.3812. The pair would later consolidate at 1.3816, down nearly 0.3 percent. The US dollar index, a broad measure of the US dollar’s performance, climbed 0.1 percent to 79.77.

The greenback will face more action Wednesday as the Federal Reserve announces its latest rate decision. The Fed, eager to reign in record stimulus this year, has tapered asset purchases by $10 billion in each of its last three policy meetings.

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