Investing.com - The euro remained lower against the U.S. dollar on Tuesday, after the International Monetary Fund cut its forecast for global economic growth this year and as downbeat German data continued to weigh.
EUR/USD hit 1.2584 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.2643, easing 0.09%.
The pair was likely to find support at 1.2502, Monday's low and resistance at 1.2761, the high of September 26.
Market sentiment was hit after the IMF downgraded its global growth forecast for both this year and next, due to stagnation in Europe and a weaker-than-forecast recovery in Japan.
The agency now sees 2014 global growth of 3.3% and 2015 growth of 3.8%, a decline of 0.1% for 2014 and 0.2% for 2015 from forecasts made in July.
The single currency had weakened earlier, after data showed that industrial output in Germany dropped by 4.0% in August. It was the largest decline since early 2009 and was much worse than forecasts for a fall of 1.5%.
The report came one day after data showed that German factory orders fell 5.7% in August, fuelling fears that the euro area’s largest economy is falling into a recession.
Meanwhile, the greenback remained supported as diverging monetary policy expectations have been boosting the greenback against the euro in recent months, with the European Central Bank likely to stick to a looser monetary policy stance amid concerns over deteriorating inflation expectations and slowing growth.
Elsewhere, EUR/JPY was down 0.61% to 136.82, while EUR/GBP fell 0.29% to 0.7845.
The yen found support on Tuesday after Japanese Prime Minister Shinzo Abe voiced concerns over the impact of a weaker yen on the economy.
The Bank of Japan left monetary policy unchanged at the conclusion of its two day policy meeting earlier Tuesday, but acknowledged that declining domestic demand as a result of a sales tax increase in April is leading to weakness in production.
In the U.K., the Office for National Statistics earlier said that manufacturing production rose 0.1% in August, in line with expectations, after an increase of 0.3% in July.
The report also showed that industrial production was flat in August, compared to expectations for a 0.2% gain, after increasing 0.4% in July.