Investing.com - The euro extended early losses against the other major currencies on Tuesday, turning sharply lower after the European Central Bank said it speed up the pace of its stimulus program, while a report showing deteriorating German economic sentiment also weighed.
EUR/USD hit one-week lows of lows of 1.1160 and was last at 1.1196, down 1.04% for the day.
The drop in the single currency came after senior ECB policymaker Benoit Coeure said the bank is planning to speed up the pace of its bond-buying stimulus program before the summer in order to avoid the “notably lower market liquidity” in late July and August.
The euro remained under pressure after data showed that German investor confidence fell more than expected this month, following a slowdown in growth in the euro area’s largest economy at the start of the year.
The ZEW Centre for Economic Research said that its index of German economic sentiment fell to 41.9, the lowest level since December, from April’s 53.3. Economists had expected a reading of 49.0.
A gauge of current conditions fell to 65.7 in May from 70.2 the previous month, ZEW said.
Recent data showed that Germany’s economy expanded 0.3% in the first quarter of 2015, slowing from 0.7% in the previous three month period.
Fears over the prospects of a Greek default also continued to pressure the single currency, even after the country’s labor minister said Tuesday that an agreement with its lenders on a cash-for-reforms deal would soon be reached.
Elsewhere, EUR/JPY was down 1.09% to 134.27, while USD/JPY was steady at 120.03.
The dollar fell to four-month lows against a basket of the other major currencies late last week after fresh batch of disappointing U.S. economic reports reinforced expectations that the Federal Reserve will delay hiking rates for longer.
The greenback rebounded on Monday, jumping more than 1% against the euro, as investors turned their attention to Friday’s U.S. inflation data and Wednesday’s minutes of the Fed’s April meeting for fresh indications on the timing of an initial rate hike.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied 0.84% to 95.02, boosted by weakness in the euro.