imageNEW YORK CITY: The euro slumped against the dollar Thursday after discouraging eurozone inflation data raised concerns about looming deflation in the single-currency bloc.

The euro bought $1.3579 around 2100 GMT, down from $1.3735 at the same time Wednesday. Earlier the beleaguered currency fell to a two-week low at $1.3573.

The euro dropped to 133.60 yen from 135.29 yen, while the dollar also fell against the Japanese currency, to 98.37 yen from 98.50 yen.

The euro-dollar rate “slipped back below the 1.3600 handle as the eurozone's consumer price report highlighted a growing threat for deflation," David Song, an analyst at DailyFX, said in a market note.

Data released by the European Union statistics agency Eurostat on Thursday showed inflation across the 17-country eurozone fell sharply in October to an annual rate of 0.7 percent, the lowest level in nearly four years.

The reading came in well below the European Central Bank's target of 2 percent, ahead of the ECB monetary policy meeting next Thursday.

“That was much weaker than expected," said Charles St-Arnaud of Nomura.

“That clearly raises the possibility that the ECB next week will show a little more pessimism about growth prospects and signal its willingness to lower interest rates," one of the tools it can use to ward off deflation, he said.

Given the strength of the euro and the weak inflationary outlook, “pressure looks set to build on the ECB to loosen monetary policy further," said economist Ben May at London-based Capital Economics.

The dollar firmed against the Swiss currency, to 0.9069 franc from 0.8991 franc late Wednesday.

The pound slipped to $1.6033 from $1.6038.