Investing.com - The euro was slightly lower against the dollar on Tuesday, as worries about the threat of deflation in the euro zone weighed ahead of Thursday’s European Central Bank meeting.
EUR/USD hit session lows of 1.3494 and was last down 0.09% to 1.3516.
The pair was likely to find support at 1.3476, Monday’s low and a ten-week low and resistance at 1.3580.
The euro remained under pressure after data late last week showed that the annual rate of euro area inflation slowed to 0.7% in January from 0.8% in December.
It was the fourth consecutive month the inflation rate came in at less than 1% and was well below the ECB’s target of 2%. The ECB unexpectedly cut rates to a record low 0.25% when inflation fell to a four-year low of 0.7% in October.
Investor sentiment was also hit by worries over signs of a slowdown in the U.S. economy and ongoing unease over a crisis in emerging markets.
A report by the Institute of Supply Management on Monday showed that its manufacturing index fell to a seven-month low in January, as new orders slumped.
The data sparked concerns over the outlook for the economic recovery, ahead of Friday’s U.S. jobs report for January, after December’s report showed that the economy added far fewer jobs than expected.
The euro pared losses against the pound, with EUR/GBP down 0.08% to 0.8289, up from session lows of 0.8266.
Demand for sterling continued to be underpinned after data released on Tuesday showed that construction output in the U.K. rose at the fastest rate since August 2007 in January, indicating that the economic recovery is continuing.
Markit said the U.K. construction purchasing managers’ index came in at 64.6 in January, up from 62.1 in December, compared to expectations for a fall to 61.5
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