Investing.com - The dollar advanced against a weaker euro on Wednesday after data revealed Italy is in a recession, while concerns the Russia-Ukraine conflict will escalate and weigh on an already slipping European economy also sent investors to the greenback.
In U.S. trading, EUR/USD was down 0.19% at 1.3351, up from a session low of 1.3333 and off a high of 1.3376.
The pair was likely to find support at 1.3298, the low from Nov. 7, 2013, and resistance at 1.3445, last Friday's high.
Italy's economy shrank for a second consecutive quarter in the three months to June, which technically means the country is in recession.
ISTAT, Italy's statistical office, reported that the country's gross domestic product contracted by 0.2% in the second quarter, confounding expectations for growth of 0.2%.
Italy’s economy shrank 0.1% in the preceding quarter.
Annualized GDP declined at a rate of 0.3%, worse than expectations for an increase of 0.1%.
The European Central Bank will release its latest decision on interest rates on Thursday, and concerns monetary authorities will loosen policy to steer the euro area away from deflationary decline softened the euro.
The euro also fell on concerns an escalating Russia-Ukraine conflict will weigh on the European economy.
Reports that Russia continues to amass troops along its border with Ukraine in wake of a U.S.-European decision to slap sanctions on Moscow for allegedly backing separatists frayed nerves due to fears the conflict will weigh on global growth, on the European economy especially.
Soft German factory data took its toll on the single currency as well.
In a report, Bundesministerium für Wirtschaft und Technologie said that German factory orders fell -3.2% in July.
Analysts had expected German factory orders to rise 1.0% last month.
Across the Atlantic, official data revealed that the U.S. trade deficit narrowed unexpectedly to a five-month low of $41.54 billion in June from $44.66 billion in May.
Analysts were expecting a $44.70 billion trade gap.
Elsewhere, the euro was up against the pound, with EUR/GBP up 0.14% at 0.7933, and down against the yen, with EUR/JPY down 0.42% at 136.67.
Manufacturing production in the U.K. rose less than expected in June, while industrial output also came in below forecasts, official data showed on Wednesday.
In a report, the U.K. Office for National Statistics said that manufacturing production inched up by 0.3% in June, disappointing expectations for a gain of 0.6%.
On an annualized basis, manufacturing production rose at rate of 1.9% in June, below forecasts for a 2.1% increase.
The report also showed that industrial production rose by 0.3% in June, missing expectations for a 0.6% gain.
On Thursday, both the European Central Bank and the Bank of England are to announce their decisions on interest rates and monetary policy.
The U.S. is to publish the weekly report on initial jobless claims.