Investing.com - The euro came off lows against the U.S. dollar on Tuesday, after European Central Bank Governing Council member Ewald Nowotny said the euro zone economy might surprise to the upside this year.
EUR/USD hit highs of 1.3698, the strongest since January 2 and was last up 0.06% to 1.3680. The euro earlier hit session lows of 1.3649.
The pair was likely to find support at 1.3625 and resistance at 1.3700.
The euro was boosted after Nowotny said there was a potential upside to the ECB’s growth forecast for this year. The ECB revised its growth forecast for 2014 slightly higher in December, saying it now expects growth of 1.1%
Nowotny also added that the ECB saw no risk of deflation or inflation in the euro area in the short to medium term.
Meanwhile, data released on Tuesday showed that industrial production in the euro zone rose more-than-expected in November, easing concerns over the outlook for growth.
Eurostat said industrial production rose 1.8% in November, beating expectations for a 1.4% gain, recovering from a downwardly revised decline of 0.8% in October. On a year-over-year basis, industrial production rose 3%, more than double expectations for a 1.4% increase.
The single currency struggled to build on gains as the dollar firmed up ahead of U.S. data on retail sales later in the trading day. Sentiment on the dollar continued to be underpinned in spite of last week’s surprisingly weak U.S. nonfarm payrolls report for December.
The euro extended gains against the yen, with EUR/JPY up 0.67% to 141.74, recovering from Monday’s one-month lows of 140.48.
Elsewhere, the euro trimmed losses against the pound, with EUR/GBP slipping 0.11% to 0.8334, after falling as low as 0.8316 earlier.
In the U.K., data on Tuesday showed that the annual rate of consumer inflation rose 2.0% in December, slowing from 2.1% in November. It was the first time since 2009 that the U.K. inflation rate was in line with the Bank of England’s official target of 2%.