Investing.com - The euro dropped against the dollar on Tuesday amid reports the European Central Bank may begin purchasing corporate debt as a new stimulus program to shore up the economy and ward off deflationary pressures.
In U.S. trading, EUR/USD was down 0.58% at 1.2726, up from a session low of 1.2716 and off a high of 1.2840.
The pair was likely to find support at 1.2623, last Wednesday's low, and resistance at 1.2886, last Wednesday's high.
The single currency slid after Reuters reported that the European Central Bank may purchase bonds issued by companies 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.
Meanwhile in the U.S., the National Association of Realtors said that existing home sales increased 2.4% to 5.17 million units in September from 5.05 million in August.
Analysts had expected existing home sales to rise 1% to 5.10 million units in September, and the better-than-expected figure boosted demand for the greenback.
While the European Central Bank is seen taking steps to loosen policy, the Federal Reserve is expected to close its bond-buying program this month and begin hiking interest rates some time in 2015.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.37% at 0.7890, and down against the yen, with EUR/JPY down 0.75% at 135.89.
Lackluster Chinese growth data fueled safe-haven demand for the yen.
China’s economy grew at an annual rate of 7.3% in the three months to September, slightly higher than the 7.2% forecast by economists but still slower than the 7.5% rate recorded in the second quarter.
It was the slowest rate of growth since the first quarter of 2009, in the midst of the global financial crisis, and the numbers pressured the greenback earlier on fears a slower global economy may weigh on U.S. recovery.
On Wednesday, the U.S. is to produce data on consumer prices.