Investing.com -- EUR/USD fell to its lowest level in more than seven months, as mixed U.S. inflation data provided the doves at the Federal Reserve with little ammunition for a delayed interest rate hike when the U.S. central bank meets again next month.
The currency pair traded in a broad range between 1.0568 and 1.0689 before settling at 1.0623, down 0.0020 or 0.19% on the session. The euro closed down against the dollar for the third time in four sessions and for the sixth time in the last nine trading days. More broadly, the euro is down more than 3.5% against its American counterpart over the last month.
EUR/USD likely gained support at 1.0519, the low from April 13 and was met with resistance at 1.1032, the high from Nov. 3.
On Wednesday morning, the U.S. Commerce Department's Bureau of Economic Analysis said U.S. personal income last month rose by 0.4%, in line with consensus estimates. It followed an upwardly revised increase of 0.2% in September. Consumers spending, meanwhile, ticked up by 0.1% in October, following a 0.1% increase a month earlier. The PCE Price Index also inched up 0.1% on the month falling within the consensus range between -0.1% and 0.2%.
The Core PCE Index, which strips out food and energy prices, remained unchanged, after gaining 0.1% in September. On a yearly basis, the core reading stood at 1.3%, also unchanged from a month earlier. The Core PCE Index is the Fed's preferred gauge of inflation as it weighs whether to raise short-term interest rates for the first time in nearly a decade.
Over the last several weeks, a number of key policymakers from the Federal Open Market Committee have sent strong indications that it is ready to tighten policy as the economy and labor market continues to show improvement. Earlier this month, Fed vice chairman Stanley Fischer said he believes that long-term inflation will move back toward its targeted goal of 2% as temporary factors from a stronger dollar and weaker energy prices continue to recede.
Currency traders also reacted to a report from Reuters that the European Central Bank could increase the scope of its bond-buying program and impose a two-tiered penalty for banks that leave deposits at its facility. The ECB's Governing Council will convene next at a highly-anticipated meeting next week.
Elsewhere, the factory sector is showing signs of renewed strength after durable goods orders surged by 3% in October, significantly above consensus estimates of gains of 1.5%. Orders in the airline sector soared 200% in connection with a prominent air show in Dubai. Consumer sentiment, meanwhile, fell back to 91.3 from a mid-month reading of 93.1, ahead of the start of the holiday shopping season on Friday. A rate hike is viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped to an intraday high of 100.22 before closing at 99.78, up 0.10% on the session. On Monday, the index eclipsed 100 for the first time since mid-April.