Investing.com - The euro rebounded against the dollar on Wednesday after investors priced in the likelihood the European Central Bank will loosen policy in June and snapped up nicely-priced positions in the single currency.
In U.S. trading, EUR/USD was up 0.09% at 1.3714, up from a session low of 1.3698 and off a high of 1.3731.
The pair was likely to find support at 1.3689, Tuesday's low, and resistance at 1.3994, last Thursday's high.
Markets are prepared for the European Central Bank to either cut rates, implement fresh stimulus measures or a combo of both next month.
Reuters reported earlier that the ECB is preparing a “package of measures” including cuts to all interest rates, with negative rates on bank deposits to encourage lending to small and medium-sized businesses to spur recovery.
A day earlier, the Wall Street Journal reported the German central bank Bundesbank would back monetary easing measures, including a negative rate on bank deposits and purchases of packaged bank loans, if such tools were needed to keep persistently low levels of inflation from becoming entrenched in the euro zone.
Last week, ECB President Mario Draghi said monetary authorities were “comfortable” with acting at its next meeting in June.
By afternoon trading on Wednesday, the euro rebounded on demand from bottom fishers, as easing measures aren't a surprise after months of soft inflation rates and other euro zone data.
Elsewhere, industrial production in the euro zone fell in line with expectations in March, though the soft numbers underlined concerns over the outlook for economic growth in the single currency bloc, official data showed on Wednesday.
In a report, Eurostat, the European statistics agency, said industrial production declined by 0.3% in March, in line with forecasts. Industrial production in February rose 0.2%.
Year-on-year, industrial production fell 0.1% in March, disappointing expectations for a 1.0% gain and after rising at a rate of 1.7% in the preceding month.
Meanwhile in the U.S., producer price inflation rose more than expected in April, while core wholesale prices also topped forecasts, official data showed on Wednesday.
The Commerce Department reported earlier that producer prices increased by 0.6% last month, beating forecasts for a 0.2% gain, after rising 0.5% in March.
Year-over-year, the producer price index rose 2.1% in April, beating expectations for a 1.7% increase and up from 1.4% in the preceding month.
The core producer price index advanced 0.5% last month, compared to expectations for a 0.2% increase, after rising 0.6% in March.
Core produces prices rose at an annualized rate of 1.9% in April, beating forecasts for a 1.4% gain and after climbing 1.4% in the preceding month.
The Federal Reserve views core prices as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories.
The euro was up against the pound, with EUR/GBP up 0.33% to 0.8171, and down against the yen, with EUR/JPY down 0.40% at 139.57.
On Thursday, the euro zone is to publish preliminary data on first quarter GDP, as well as revised data on consumer inflation.
The U.S. is to release data on initial jobless claims, consumer inflation and industrial production, as well as a report on manufacturing activity in the Philadelphia region.