Investing.com - The euro remained near nine-month lows against the U.S. dollar on Tuesday, as data showing that investor confidence in Germany slumped to the lowest level since December 2012 this month continued to weigh on the single currency.
EUR/USD hit 1.3336 during U.S. morning trade, the pair's lowest since August 6; the pair subsequently consolidated at 1.3352, shedding 0.23%.
The pair was likely to find support at 1.3333, the low of August 6 and a nine-month low and resistance at 1.3409, Monday's high.
The euro weakened broadly after the ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 8.6 this month, down from 27.1 in July. It was the weakest reading in 20 months and was well below economists’ forecasts of 18.2.
The current conditions Index deteriorated to a seven month low of 44.3 from 61.8 in July, worse than expectations for a decline to 55.5.
The report said the decline in economic sentiment was likely connected the impact of ongoing geopolitical tensions on the German economy.
Recent economic reports have indicated that sanctions on Russia as a result of the conflict in Ukraine are acting as a drag on the German economy. Germany is Russia’s largest trading partner in Europe.
The ZEW noted that industrial production and incoming orders suggest “markedly reduced investment activities by German firms against the backdrop of uncertain sales prospects.”
The ZEW said the report indicated that economic growth in Germany will be weaker than expected in 2014.
Investors were looking ahead to Thursday’s preliminary data on second quarter growth in the euro zone, as well as in Germany and France, amid expectations for a weak reading.
The euro zone was also to publish revised data on consumer prices for July on Thursday, with the annual rate of inflation expected to remain unchanged at 0.4%, well below the ECB’s 2% target.
The ECB cut rates to record lows in June in a bid to stave off growing deflationary pressures in the region and concerns over the diverging monetary policy stance between it and its major peers have continued to pressure the single currency lower.
The euro was also lower against the pound, with EUR/GBP sliding 0.30% to 0.7949.