Investing.com - The euro dipped against an advancing dollar on Monday after investors flocked to safety in the greenback on news Japan unexpectedly dipped into a recession last quarter
In U.S. trading, EUR/USD was down 0.57% at 1.2455, up from a session low of 1.2446 and off a high of 1.2577.
The pair was likely to find support at 1.2397, Friday's low, and resistance at 1.2578, the high from Nov. 4.
Official data released earlier revealed that Japan’s gross domestic product contracted by an annualized 1.6% in the third quarter following a 7.3% drop in the preceding quarter, which puts the country in a recession.
Economists were forecasting a 2.3% growth rate, and the unexpected contraction sparked concerns that the global economy may be battling headwinds.
Separately, Japanese Prime Minister Shinzo Abe was expected to postpone a planned sales tax increase due to come into effect next year after a sales tax hike in April of this year acted as a drag on growth.
The prime minister was also expected to call for snap elections which could take place as soon as next month.
News of Japan's recession offset mixed U.S. economic indicators.
The Federal Reserve reported earlier that industrial production contracted by 0.1% in October, disappointing expectations for a gain of 0.3%.
Industrial production for September was revised down to a gain of 0.8% from a previously reported increase of 1.0%.
The report showed that the capacity utilization rate, a measure of how fully firms are using their resources, dipped to 78.9% in October from 79.2% in September, missing expectations for a 79.3% reading.
In a separate report, the Federal Reserve Bank of New York said that its general business conditions index increased to 10.2 this month 6.2 in October. Analysts had expected the index to rise to 11.1 in November, though a reading above 0.0 indicates improving conditions, which gave the dollar support.
The new orders index rose eleven points to 9.1, and the shipments index advanced eleven points to 11.8.
The index for number of employees edged down to 8.5 but remained positive, indicating that employment levels grew, which also bolstered the greenback.
Indexes for the six-month outlook were generally higher this month and conveyed a strong degree of optimism about future business conditions.
The Empire State index is of interest to traders primarily because it is seen as an early forecast of the Institute for Supply Management's widely-watched factory survey.
Meanwhile in Europe, Germany’s Bundesbank warned in its monthly report that the outlook for growth in the region’s largest economy was likely to remain weak in the next few months.
“The further deterioration in economic expectations and the stagnation of new orders point to a rather sluggish course of economic development in Germany until at least the end of 2014," the Bundesbank said.
“No marked recovery in important euro-area partner countries has yet materialized,” it added.
The report also argued that the European Central Bank should not embark on a larger stimulus program, saying it would not be constructive.
Earlier Monday, data showed that euro zone exports jumped 9% on a year-over-year basis in September, boosting the trade surplus to €17.7 billion, from €15.4 in August. The surge in exports boosted the outlook for third-quarter growth.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.46% at 0.7957, and down against the yen, with EUR/JPY down 0.45% at 145.02.
The yen dropped earlier on news of Japan's recession though it later bounced back.
On Tuesday, the ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
The U.S. is to release data on producer price inflation.