Forex - EUR/USD hits fresh 14-month lows after upbeat U.S. data

The euro dropped to fresh 14-month lows against the U.S. dollar on Wednesday, after upbeat U.S. new home sales data and as comments by European Central Bank President Mario Draghi coupled with downbeat data from Germany weighed broadly on the single currency.

The pair was likely to find support at 1.2754 and resistance at 1.2903, Tuesday's high.EUR/USD hit 1.2786 during U.S. morning trade, the pair's lowest since July 2013; the pair subsequently consolidated at 1.2779, retreating 0.53%.

Official data showed that U.S. new home sales data rose 18.0% last month to 504,000 units, beating expectations for a 4.4% gain to 430,000 units. New home sales for July were revised to 1.9% increase from a previously estimated 2.4% drop.

The data came a day after a report showed that the U.S. manufacturing sector expanded in September, matching the rate of growth seen in the previous month, which was the strongest in over four years.

The strong data added to expectations that the Federal Reserve will hike interest rates sooner than markets are expecting.

The euro was hit earlier, after ECB President Mario Draghi said the bank will keep its monetary policy "accommodative" for as long as needed, and will use every tool at its disposal to fight deflation.

"Monetary policy will remain accommodating for a long time and I can tell you that the Governing Council is unanimous in committing itself to using the tools at its disposal to bring inflation back to just under 2%."

"Interest rates will remain low because they can’t get much lower," he said.

The ECB unexpectedly cut rates to record lows across the euro zone earlier this month, in a bid to address slowing inflation.

The single currency also remained under pressure as data on Wednesday showed that Germany's Ifo business confidence index deteriorated for the fifth successive month in September.

The Ifo economic institute's business climate index fell to 104.7 from 106.3 in August. It was the lowest level since April 2013 and much weaker than economists’ forecasts for 105.7.

The data added to fears that the euro zone’s largest economy is losing momentum.

The euro was also lower against the pound, with EUR/GBP shedding 0.32% to 0.7814.