Investing.com - The euro eased back from three-week highs against the dollar on Tuesday after data showing that German economic sentiment deteriorated to the lowest level in a year this month.
EUR/USD was last at 1.1372, down from highs of 1.1410 ahead of the report.
The ZEW Centre for Economic Research said its index of German economic sentiment fell to 1.9 this month from 12.1 in September, well below economist’s forecasts for a reading of 6.0.
It was the sixth consecutive monthly decline.
A separate index, measuring current conditions dropped to 55.2 from 67.5 points in September, compared to expectations for a drop to 64.7.
The emissions scandal at German carmaker Volkswagen (DE:VOWG) and weakness in emerging markets dampened the outlook for the euro zone's largest economy.
“The weakening economic development in emerging markets dampens the economic outlook for Germany’s export-oriented economy,” ZEW President Clemens Fuest said in a statement.
“While economic growth in the second quarter was largely driven by external demand, it is becoming less likely that exports will stimulate growth in the near future.”
The weak German data came on the heels of figures showing a sharp drop in Chinese imports last month, rekindling fears over slowing global growth.
Official data released earlier Tuesday showed that Chinese imports tumbled 20.4% in September on a year-over-year basis, the eleventh straight monthly decline.
Exports fell by a smaller than forecast 3.7% from a year earlier, resulting in a trade surplus of $60.34 billion.
The weak data underlined concerns over weakening demand for the world’s second largest economy.
The euro turned lower against the yen, with EUR/JPY slipping 0.14% to 136.15, from overnight highs of 136.59.
The single currency held gains against sterling, with EUR/GBP up 0.81% to 0.7459.
The pound turned sharply lower after data on Tuesday showing that the U.K. fell back into negative inflation in September dampened expectations for higher interest rates from the Bank of England.