Investing.com - The euro shrugged off a report showing that German economic sentiment deteriorated in January, to rise three-week highs against the dollar, as the single currency’s strong gains against the weaker yen lent support.
EUR/USD hit 1.3729, the highest since January 24 and was last up 0.14% to 1.3725.
The pair was likely to find support at 1.3685 and near-term resistance at 1.3738, the high of January 24.
German economic sentiment deteriorated slightly in February, according to data released on Tuesday, as concerns that the economic recovery in the U.S. could lose momentum weighed.
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.
“This month’s decline in economic expectations must not be overstated. The majority of surveyed financial market experts remain optimistic,” ZEW President Professor Clemens Fuest said.
Meanwhile, the ZEW index of euro zone economic sentiment fell to 68.5 from 73.3 last month, compared to expectations for an uptick to 73.9.
Elsewhere, EUR/JPY rose to 140.86 on Tuesday, the highest since January 29, and was last up 0.62% to 140.54.
The yen weakened broadly after the Bank of Japan kept rates on hold at its monthly policy meeting, but extended a bank lending scheme in an attempt to boost the effectiveness of its monetary stimulus program.
The BoJ decided to double part of a growth lending program and said individual banks could borrow twice as much as previously under a second facility.
Policymakers voted to leave the banks main policy target unchanged. The bank also maintained its upbeat economic assessment, indicating that there will be no further monetary easing in the coming months.
The common currency was also higher against the pound, with EUR/GBP rising 0.23% to 0.8219.
Sentiment on sterling remained subdued after data showed that consumer price inflation in the U.K. fell back below the Bank of England’s 2% target for the first time since November 2009 in January.
The Office for National Statistics said consumer price inflation accelerated at a rate of 1.9% last month, down from 2.0% in December. Analysts had expected consumer price inflation to remain unchanged last month.
Consumer prices fell 0.6% in January from a month earlier, compared to expectations for a decline of 0.5%.
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