The euro depreciated sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4415 level and was capped around the $1.4655 level. Stops were reached below the $1.4490 level, representing the 50% retracement of the move from $1.4015 to $1.4965. Traders drove the common currency lower on stronger-than-expected U.S. November consumer price inflation data that saw headline CPI up 0.8% - above forecasts – while core CPI printed at +0.3%. These data follow yesterday's torrid producer price inflation data and collectively, they suggest the Federal Open Market Committee cannot declare inflation dead. The FOMC next deliberates interest rates on 30-31 January and many traders believe the Fed will lower the fed funds target rate by another 25bps. Other data released in the U.S. today saw November industrial production up 0.3% while capacity utilization gained 0.1% to close 81.5%. In eurozone news, EMU-13 harmonized inflation was upwardly revised to 3.1% from 3.0%. The European Commission called this a clear matter of concern and eurozone-wide inflation is now more than 50% above the ECB's target ceiling rate of 2.0%. ECB's Mersch sees inflation at an elevated level until the end of 2008. Notably, German final November CPI was up 0.5% m/m and 3.1% y/y. Euro bids are cited around the US$ 1.4355 level.