Investing.com - The euro rallied to a two-day high against the U.S. dollar on Tuesday, after a report showing that the ZEW index of German business sentiment recorded its largest ever monthly increase in January boosted demand for the single currency.
EUR/USD hit 1.2801 during European early afternoon trade, the pair’s highest since Friday; the pair subsequently consolidated at 1.2766, gaining 0.78%.
The pair was likely to find support at 1.2625, Monday’s low and a 16-month trough and resistance at 1.2844, last Thursday’s high.
The euro added to gains against the greenback after the ZEW Centre said that its index of German business sentiment jumped to minus 21.6 in January, from the previous month’s reading of minus 53.8 and surpassing expectations for an increase to minus 49.2.
The ZEW index of economic sentiment in the euro zone also improved more-than-forecast in January, rising to minus 32.5 from minus 54.1.
A separate report showed that consumer price inflation in the single currency bloc rose less-than-expected in December, advancing 2.7% after a 2.8% rise the previous month.
Also Tuesday, Spain auctioned EUR4.9 billion of short-term government debt at sharply lower yields, indicating that investor sentiment has not been hit by last week’s sovereign ratings downgrade.
The euro had found support earlier after better-than-forecast data on Chinese fourth quarter economic growth boosted demand for riskier assets.
But the single currency remained vulnerable after Standard & Poor’s downgraded the triple-A rating of the euro zone’s bailout fund by one notch on Monday, following Friday’s downgrade of nine euro zone sovereigns, including France.
Meanwhile, talks aimed at negotiating a restructuring of Greece’s debts remained deadlocked, amid disagreements over a bond swap with private creditors.
The euro was also higher against the pound, with EUR/GBP adding 0.49% to hit 0.8306.
Later Tuesday, the U.S. was to produce a report on manufacturing activity in New York State.
EUR/USD hit 1.2801 during European early afternoon trade, the pair’s highest since Friday; the pair subsequently consolidated at 1.2766, gaining 0.78%.
The pair was likely to find support at 1.2625, Monday’s low and a 16-month trough and resistance at 1.2844, last Thursday’s high.
The euro added to gains against the greenback after the ZEW Centre said that its index of German business sentiment jumped to minus 21.6 in January, from the previous month’s reading of minus 53.8 and surpassing expectations for an increase to minus 49.2.
The ZEW index of economic sentiment in the euro zone also improved more-than-forecast in January, rising to minus 32.5 from minus 54.1.
A separate report showed that consumer price inflation in the single currency bloc rose less-than-expected in December, advancing 2.7% after a 2.8% rise the previous month.
Also Tuesday, Spain auctioned EUR4.9 billion of short-term government debt at sharply lower yields, indicating that investor sentiment has not been hit by last week’s sovereign ratings downgrade.
The euro had found support earlier after better-than-forecast data on Chinese fourth quarter economic growth boosted demand for riskier assets.
But the single currency remained vulnerable after Standard & Poor’s downgraded the triple-A rating of the euro zone’s bailout fund by one notch on Monday, following Friday’s downgrade of nine euro zone sovereigns, including France.
Meanwhile, talks aimed at negotiating a restructuring of Greece’s debts remained deadlocked, amid disagreements over a bond swap with private creditors.
The euro was also higher against the pound, with EUR/GBP adding 0.49% to hit 0.8306.
Later Tuesday, the U.S. was to produce a report on manufacturing activity in New York State.