The US dollar index showed that the single currency fell to trade at the lowest level since November, as prices in Europe accelerated but in a pace slower than expected.
The Consumer Price gauge released by the 17-nation economy showed that prices accelerated in February by 2.3 percent. Analysts expected the index to remain unchanged at 2.4 percent.
Projections that the Federal Reserve will keep interest rates unchanged in the upcoming rate decision led the dollar to lose grounds against most of its counterparts, while the European shared currency traded higher against majors ahead of ECB's rate decision that will be released later this week.
The bank is expected to preserve rates for the upcoming month, but inflation threats could pressure policy makers to shift the bank's policy into more Hawkish rather than Dovish.
Trichet hinted earlier this month that the bank will not hesitate to increase rates incase inflation threatens recovery; this comes conversely with Bernanke's statements that the Fed will most probably keep rates unchanged.
The Dollar index fell to 76.845, marking the lowest level since November 9. The index opened trading at 77.200, while setting a high of 77.219 and a low of 76.812.
The Euro maintained its upside trend, where it rebounded from the support at 1.3745 to currently trade at 1.3828. The pair opened trading at 1.3756 while set the highest at 1.3847 and the lowest at 1.3709.
Further appreciation is expected as far as trading remains above the above mentioned support, where a breach of the support may force a downside correctional move to be activated with targets set at 1.3507.
However, the upside trend is forecast to prevail as the ECB's rate decision approaches, with targets at 1.3890.
As for the pound, the GBP/USD pair breached a resistance at 1.6130, allowing the pair to appreciate further to target 1.6295. The pair opened trading at 1.6110 while setting a high of 1.6242 and a low of 1.6070 while currently trading at 1.6236.
Trading range for today will be bounded by the support at 1.6125 and the resistance at 1.6295.
The dollar gained grounds against the yen, as it failed to breach the support at 81.61, where investors turned bearish in regards of the yen after the housing data from Japan came pessimistic.
The weekly trend for the week is bearish, with initial targets set at 80.35, which if breached, would pave the path for the pair to descend to test 76.90, note that stability below 82.45 is required to accomplish these expectations.
The USD/JPU pair is trading at 81.84, compared with the opening levels of 81.67 where it set the highest at 81.95 and the lowest at 81.60.
Note: data was collected at 14:20 GMT.