Investing.com - The dollar moved higher against the euro on Tuesday after lackluster German inflation data fuelled concerns over the inflation outlook for the euro zone, while the pound was trading close to multi-year peaks against the greenback.
EUR/USD touched lows of 1.3812 and was last down 0.22% to 1.3818.
The euro weakened across the board after Germany’s Federal Statistics Bureau reported that consumer prices fell 0.2% this month, and increased 1.3% on a year-over-year basis. Market expectations had been for a monthly decline of 0.1% and an annual increase of 1.4%.
The data came as investors were looking ahead to preliminary data on euro zone inflation, due for release on Wednesday.
The euro rose to almost two-week highs against the dollar earlier amid expectations that Wednesday’s report would show an uptick in consumer prices, after the annual rate of inflation in the region slowed to a record low 0.5% in March. The ECB targets an inflation rate of close to but just under 2%.
Meanwhile, sterling was higher against the dollar, with GBP/USD up 0.23% to 1.6845, not far from the four-and-a-half year peaks of 1.6856 struck on Monday.
Sterling briefly touched session lows after data on Tuesday showed that the U.K. economy grew slightly less than forecast in the first three months of the year.
The Office of National Statistics reported that the U.K. economy grew 0.8% in the first quarter, bringing the annual rate of growth to 3.1%, the fastest rate of annual growth since the fourth quarter of 2007. Market expectations had been for quarterly growth of 0.9% and an annual expansion of 3.2%.
Elsewhere, USD/JPY edged up 0.07% to 102.55.
Market participants were looking ahead to monetary policy statements by the Bank of Japan and the Federal Reserve on Wednesday. The BoJ was expected to keep the size of its stimulus program unchanged, while the Fed was expected to stick to its current timetable for tapering its asset purchase program.
The dollar pushed higher against the Swiss franc, with USD/CHF up 0.36% to 0.8834.
NZD/USD was trading at 0.8542. The pair touched three-and-a-half week lows of 0.8522 earlier Tuesday, when data showed that New Zealand posted a narrower-than-expected trade surplus in March.
Meanwhile, AUD/USD edged up 0.10% to 0.9264, while USD/CAD fell to two-week lows of 1.0963, down 0.61%.
In the U.S., data on Tuesday showed that consumer confidence dipped this month but remained close to recent highs. The Conference Board said its consumer confidence index fell to 82.3 in April from a revised 83.9 in March, the highest level since January 2008. Analysts had expected the index to fall to 83.0.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, edged up 0.10% to 79.85.