Investing.com - The dollar dropped to session lows against the euro and the yen on Tuesday after data showing U.S. factory orders fell for the sixth straight month in April sparked fears over the outlook for second quarter growth.
EUR/USD jumped to highs of 1.1192 immediately following the release of the data, before easing back to 1.1134.
The drop in the dollar came after the Commerce Department said factory orders fell 0.4% in April, confounding expectations for a 0.2% increase.
March’s figure was revised to 2.2% from a previously reported 2.1%.
On a year-over-year basis, factory orders dropped 6.4%, the sixth straight monthly decline.
The unexpectedly weak data sparked fresh fears over the outlook for second quarter growth after data last month showed that the U.S. economy contracted 0.2% in the first quarter.
The dollar had gained ground on Monday as upbeat U.S. economic reports, including on manufacturing activity and construction spending, fuelled optimism that the economy was regaining momentum after a weak first quarter.
But another report on Monday showing that U.S. consumer spending was flat in April indicated that growth could struggle to pick up in the current quarter.
Sentiment on the euro remained fragile amid ongoing uncertainty over stalled negotiations on a cash-for-reforms deal for Greece.
Prime Minister Alexis Tsipras said Tuesday that Greece submitted a “comprehensive proposal” to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.
Meanwhile, data released earlier on Tuesday showed that euro zone consumer prices rose for the first time in six months in May.
The euro zone consumer price index rose by 0.3% from a year earlier in May, following a flat reading in April. Economists had forecast an increase of 0.2%.
Underlying inflation, which excludes prices for energy, food and alcohol, also picked up indicating the recovery in the region is gaining traction.
The dollar was also weaker against the yen. USD/JPY fell 0.63% to 124.00 in the wake of the factory data, off the 12-and-a-half-year highs of 125.06 struck earlier in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to two-week lows of 97.29.