Investing.com - The dollar fell to six-week lows against the euro on Tuesday as disappointing manufacturing figures from New York added to worries that the U.S. recovery is losing momentum.
EUR/USD hit 1.3770, the highest since January 2 and was last up 0.36% to 1.3755.
The dollar weakened after the Federal Reserve Bank of New York said that its general business conditions index came in at 4.48 this month, down from a 20-month high of 12.51 in December. Analysts had expected the index to decline to 9.00.
The new orders index fell to zero from a two-year high of 11 last month.
A series of soft U.S. economic data has prompted some investors to wonder whether the Federal Reserve will slow the pace of reductions to its asset-buying stimulus program.
The common currency shrugged off a report showing that the closely watched ZEW index of German economic sentiment deteriorated unexpectedly in February, amid concerns over the outlook for the U.S. economic recovery and fears over turbulence in emerging markets.
The ZEW Centre for Economic Research said that its index of German economic sentiment came in at 55.7 this month, down from 61.7 in January. Analysts had expected an unchanged reading.
However, the current conditions index improved to two-and-a-half year highs of 50.0 this month from 41.2 in January, beating expectations for an increase to 44.0.
Elsewhere, the dollar pared gains against the yen. USD/JPY was last up 0.42% to 102.34, off highs of 102.75.
The yen weakened against the dollar and the euro on Tuesday after the Bank of Japan decided to double part of a growth lending program at its monthly policy meeting, and said individual banks could borrow twice as much as previously under a second facility, in an attempt to boost the effectiveness of its monetary stimulus program.
GBP/USD dipped 0.03% to 1.6709. The pair fell to lows of 1.6656 earlier in the session after data showed that consumer price inflation in the U.K. fell below the Bank of England’s 2% target for the first time since November 2009 in January.
Official data showed that consumer price inflation accelerated at a rate of 1.9% last month, down from 2.0% in December. Analysts had expected consumer prices to remain unchanged.
Consumer prices fell 0.6% in January from a month earlier, compared to expectations for a decline of 0.5%.
The dollar hit session lows against the Swiss franc, with USD/CHF down 0.35% to 0.8882.
The Australian dollar was steady, with AUD/USD edging up 0.03% to 0.9035.
Demand for the Aussie continued to be underpinned after Tuesday’s minutes of the Reserve Bank’s February meeting said a period of steady interest rates is most likely as record-low borrowing costs and a weaker currency support growth.
Meanwhile, NZD/USD was down 0.74% to 0.8304.
The U.S. dollar was little changed against the Canadian dollar, with USD/CAD inching down 0.05% to 1.0957.
The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.15% to an almost six-week low of 80.07.