Investing.com - The euro dropped to fresh 11-year lows against the U.S. dollar on Friday, as downbeat euro zone inflation data fuelled further expectations that the European Central Bank could announce additional stimulus measures in its upcoming policy statement.
EUR/USD hit 1.1538 during U.S. morning trade, the pair's lowest since October 2003; the pair subsequently consolidated at 1.1547, retreating 0.72%.
The pair was likely to find support at 1.1531 and resistance at 1.1649, the session high.
The euro was hit after official data earlier showed that consumer price inflation in the euro zone fell 0.1% in December, in line with market expectations, after a 0.2% decline in November.
The bloc's CPI rose at an annualized rate of 0.2% last month, unchanged from November.
Core CPI in the euro zone, which excludes food, energy, alcohol and tobacco, rose 0.4% in December, after a 0.1% downtick the previous month.
The data fuelled further concerns over persistently low levels of inflation in the euro area. The European Central Bank targets an inflation rate of close to, but just below 2%.
The data came after an interim ruling by the European Court of Justice on Wednesday was seen as clearing the way for the ECB to implement quantitative easing measures at its upcoming meeting on January 22.
The single currency also remained under pressure after the Swiss National Bank shocked markets on Thursday by scrapping the 1.20 per euro exchange rate floor it imposed in September 2011, in a bid to stave off deflation and prevent the continued appreciation of the safe-haven franc.
The move indicated that the SNB sees a high likelihood that the ECB will implement quantitative easing measures at its upcoming meeting next week.
The euro strengthened against the Swiss franc on Friday, with EUR/CHF rallying 1.27% to 0.9895.
In the U.S., the University of Michigan said, in a preliminary report on Friday, that its consumer sentiment index rose to 98.2 this month from 93.6 in December, compared to expectations for a rise to 94.1.
The UoM's inflation expectations for the next 12 months ticked down to 2.4% in January from 2.8% in December.
A separate report showed that U.S. consumer price inflation fell 0.4% last month, in line with expectations and after a 0.3% decline in November.
Core CPI, which excludes food and energy, was flat in December, compared to expectations for a 0.1% rise, after a 0.1% uptick the previous month.
Data also showed that U.S. industrial production slipped 0.1% in December, confounding expectations for a 0.1% rise, after an increase of 1.3% in November.
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