Investing.com -- EUR/USD fell steadily on Tuesday remaining near seven-month lows, as optimistic U.S. inflation data augmented hawkish arguments for an interest rate hike by the Federal Open Market Committee when it meets again next month.
The currency pair traded in a tight range between 1.0631 and 1.0691 before settling at 1.0645, down 0.0042 or 0.39% on the session. The euro has closed lower against the dollar in three straight sessions and four of the last six trading days. After a robust monthly U.S. jobs report strengthened the case for an imminent rate hike by the Federal Reserve earlier this month, EUR/USD has closed below 1.085 in each of the last eight sessions. More broadly, the euro has fallen by more than 6% against its American counterpart over the last 30 days of trading.
EUR/USD likely gained support at 1.0519, the low from April 13 and was met with resistance at 1.1496, the high from Oct. 15.
The U.S. Department of Labor's Bureau of Labor Statistics said on Tuesday that its Consumer Price Index (CPI) rose by 0.2% for the month of October amid considerable increases in Medical Care, Education and Vacation prices. Further gains, though, were restrained by modest increases in home prices, which rose by 0.2% after a 0.3% gain in September. Overall, analysts expected monthly gains in the October CPI of 0.2%.
On a yearly basis, October CPI inched up by 0.2% over the last 12 months up from a flat reading in September. Following two months of steep declines, energy prices jumped by 0.3% in October, while food prices inched up by 0.1%.
Core CPI, which strips out food and energy prices, rose by 0.2% on a monthly basis in line with consensus estimates. Over the last year, Core CPI has increased by 1.9%, unchanged from the yearly gains reported a month earlier. Also in September, the Core Personal Consumption Expenditures (PCE) Index, increased by 1.3% year-over-year, unchanged from the previous month. The Core PCE Index is the Fed's preferred gauge for inflation as it weighs whether to raise interest rates for the first time in nearly a decade.
Long-term inflation has remained under the Fed's targeted goal of 2% for every month over the last three years. Last week, Fed vice chairman Stanley Fischer said he expects inflation to move toward its target over the next year as temporary factors from a stronger dollar and weak energy prices continue to recede.
A rate hike is viewed as bullish for the dollar, as foreign investors pile into the greenback to take advantage of higher yields.
Fluctuations in the currency pair were also minor after a soccer match between Germany and the Netherlands in Hanover on Tuesday was cancelled due to a serious bomb threat, according to German officials. The euro fell 0.85% against the dollar on Monday in the first full day of trading following Friday's terrorist attacks in Paris that killed at least 120 people and wounded at least 350 others. The coordinated attacks included several explosions outside the Stade de France stadium during a friendly between France and Germany.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, surged to a fresh seven-month high at 99.83, before settling at 99.74, up 0.20% on the session.