Investing.com - The euro extended gains against the dollar and the yen on Tuesday, helped by solid gains against the pound after weak U.K. inflation data, but concerns over weakening demand in the euro zone meant the upside for the single currency was likely to remain limited.
EUR/USD recovered from session lows of 1.3359 to hit 1.3450 during U.S. morning trade, the highest since November 7, up 0.34%.
The pair was likely to find support at 1.3343, Friday’s low and a seven-week low and resistance at 1.3475.
The euro rose to more than one week highs against the yen, with EUR/JPY advancing 0.72% to 133.89.
Data released on Tuesday showed that the annual rate of inflation in Germany, the euro zone’s largest economy, slowed to 1.2% in October, the lowest level in more than three years, from 1.4% in September.
The data added to concerns over growing deflationary pressures in the euro area, after the annual rate of inflation across the euro zone slowed to a four year low of 0.7% in October.
The downward trend in euro area inflation prompted the European Central Bank to cut rates to a record low 0.25% on Thursday, sparking a broad selloff in the euro.
Demand for the dollar continued to be underpinned after last week’s strong U.S. jobs report fuelled expectations that the Federal Reserve may start scaling back its USD85 billion-a-month asset purchase program as soon as next month.
The euro rose to one-week highs against sterling, with EUR/GBP up 0.64% to 0.8438.
The pound weakened across the board on Tuesday after data showed that the annual rate of inflation in the U.K. slowed to the lowest level in more than a year in October.
The Office of National Statistics said the annual rate of inflation in the U.K. slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.
The weak data prompted investors to trim back expectations that the Bank of England would raise interest rates sooner than the bank’s forward guidance from August indicated.
EUR/USD recovered from session lows of 1.3359 to hit 1.3450 during U.S. morning trade, the highest since November 7, up 0.34%.
The pair was likely to find support at 1.3343, Friday’s low and a seven-week low and resistance at 1.3475.
The euro rose to more than one week highs against the yen, with EUR/JPY advancing 0.72% to 133.89.
Data released on Tuesday showed that the annual rate of inflation in Germany, the euro zone’s largest economy, slowed to 1.2% in October, the lowest level in more than three years, from 1.4% in September.
The data added to concerns over growing deflationary pressures in the euro area, after the annual rate of inflation across the euro zone slowed to a four year low of 0.7% in October.
The downward trend in euro area inflation prompted the European Central Bank to cut rates to a record low 0.25% on Thursday, sparking a broad selloff in the euro.
Demand for the dollar continued to be underpinned after last week’s strong U.S. jobs report fuelled expectations that the Federal Reserve may start scaling back its USD85 billion-a-month asset purchase program as soon as next month.
The euro rose to one-week highs against sterling, with EUR/GBP up 0.64% to 0.8438.
The pound weakened across the board on Tuesday after data showed that the annual rate of inflation in the U.K. slowed to the lowest level in more than a year in October.
The Office of National Statistics said the annual rate of inflation in the U.K. slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.
The weak data prompted investors to trim back expectations that the Bank of England would raise interest rates sooner than the bank’s forward guidance from August indicated.