Investing.com - The dollar advanced one-month highs against the euro on Tuesday following reports that Germany’s Bundesbank would back easing measures by the European Central Bank, shrugging off a weaker than forecast U.S. retail sales report.
EUR/USD hit 1.3706, the weakest since April 7 and was last down 0.38% to 1.3705.
The drop in the euro came after reports that Germany’s central bank would back monetary easing measures by the ECB if they were needed to keep persistently low levels of inflation from becoming entrenched in the euro zone.
The ECB warned last week that it is “comfortable” with acting at its next meeting in June after it has a chance to review the latest economic projections.
The single currency also came under pressure after data showed that German economic sentiment slumped to a 16-month low in May.
The ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 33.1 this month from 43.2 in April. Analysts had expected a reading of 41.0.
The current conditions index improved to 62.1 from 59.5 in April, ahead of expectations of 60.5.
EUR/JPY was down 0.26% to session lows of 140.12.
Elsewhere, the dollar was higher against the yen, with USD/JPY up 0.14% to 102.25.
The pair briefly pared back gains after the Commerce Department reported that U.S. retail sales rose just 0.1% last month, missing expectations for a 0.4% increase, while core retail sales were flat.
The pound slid lower against the dollar, with GBP/USD down 0.18% to 1.6837, holding below last week’s almost five-year peaks of 1.6993. Demand for sterling continued to be underpinned by expectations for a U.K. rate hike in the early part of next year.
Elsewhere, USD/CHF was up 0.22% to 0.8896.
The Australian dollar was little changed, with AUD/USD at 0.9361. The pair was lower earlier after data on Tuesday showed that industrial production and retail sales in China slowed in April, while soft domestic housing reports also weighed.
NZD/USD rose 0.26% to 0.8641 and USD/CAD inched up 0.05% to trade at 1.0899.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.25% to a more than five-week high of 80.15.