Investing.com - The euro fell to session lows against the dollar on Tuesday after preliminary data showed that German consumer prices came in below forecasts in April, adding to concerns over the low inflation outlook for the euro zone.
EUR/USD touched session lows of 1.3822 and was last down 0.18% to 1.3824.
The pair was likely to find support at 1.3790, the low of April 24 and resistance at 1.3878, the session high.
The drop in the euro came after Germany’s Federal Statistics Bureau reported that consumer prices fell 0.2% this month, and increased 1.3% on a year-over-year basis. Market expectations had been for a monthly decline of 0.1% and an annual increase of 1.4%.
The data came as investors were looking ahead to preliminary data on euro zone inflation, due for release on Wednesday.
The euro rose to almost two-week highs against the dollar earlier amid expectations that Wednesday’s report would show an uptick in consumer prices, after the annual rate of inflation in the region slowed to 0.5% in March, the lowest since November 2009.
The European Central Bank targets an inflation rate of close to but just under 2%.
Last week, ECB President Mario Draghi reiterated warnings that further gains in the euro could trigger additional monetary easing to stop inflation from falling. He also said the ECB could launch a "broad-based" asset purchase program if the medium-term inflation outlook deteriorated.
But expectations for further easing measures subsided on Tuesday after Draghi told German lawmakers that quantitative easing measures still remained some way off, despite the low inflation outlook.
The euro pared back gains against the yen, with EUR/JPY trading at 141.98, off session highs of 142.48.
The single currency weakened against the pound, with EUR/GBP down 0.23% to 0.8220.
In the U.K. data on Tuesday showed that the economy grew slightly less than forecast in the first three months of the year.
The Office of National Statistics reported that the U.K. economy grew 0.8% in the first quarter, bringing the annual rate of growth to 3.1%, the fastest rate of annual growth since the fourth quarter of 2007. Market expectations had been for quarterly growth of 0.9% and an annual expansion of 3.2%.