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Fear of Deflation in Euro Zone, EURUSD extending Losses

EURUSD : 4 Hour Chart

EURUSD extending losses by breaking below the key support at 1.2667 on the 4 hour chart after the release of awaited euro zone inflation data which is signaling a threat of economy moving towards deflation. 

"Official data showed that the consumer price inflation in euro zone rose at an annualized rate of .3% this month in line with the economist’s expectations but slowing down from .4% in August and also far below the 2% target level. Core CPI which excludes the volatile items also missed the economist’s expectations for .9% increase by posting the reading of .7%."

A separate reports from Germany on Retail Sales and Unemployment change data also missed the economist’s expectations. Germany is the largest economy in the euro zone. On the other hand US dollar continues to be supported by the expectations that the central bank might start increasing interest rates soon.

EURUSD : Weekly Chart

There is no bullish sign currently on the pair. However on the weekly chart we can see that the pair broke down below the key support level targeting towards the next support at 1.2387.