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Forex - Dollar gains as euro nears 9-month lows

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Shutterstock photo - - The dollar moved higher against a basket of major currencies on Tuesday as tensions over Ukraine escalated, while the euro re-approached nine month lows after German investor confidence deteriorated sharply this month.

Concerns over an escalation of hostilities between Russia and Ukraine mounted amid warnings that Russia was using a humanitarian aid convoy as a pretext for invading eastern Ukraine.

Risk appetite also soured after the Zew Institute said its closely watched index of German economic sentiment fell to 8.6 from 27.1 in July. It was the weakest reading since December 2012, and fell far short of forecasts of 18.2.

EUR/USD was down 0.29% to 1.3343 from around 1.3358 ahead of the release of the data, hovering just above the nine month lows of 1.3332 struck last Wednesday.

The report said the decline in economic sentiment was likely connected to the impact of ongoing geopolitical tensions on the German economy. The ZEW also said the report indicated that economic growth in Germany will be weaker than expected in 2014.

The euro zone was to publish an inflation report as well as preliminary data on second quarter growth in the euro zone, Germany and France on Thursday, amid expectations for weak readings.

Weak data on growth and inflation would add to pressure on the European Central Bank to implement fresh measures to shore up the recovery after it cut rates to record lows in June.

The dollar edged higher against the yen, with USD/JPY up 0.10% to 102.29.

Sterling and the Swiss franc weakened, with GBP/USD dipping 0.05% to 1.6770, while USD/CHF added 0.31% to trade at 0.9095.

The Australian dollar was steady, with AUD/USD supported at 0.9260. Earlier Tuesday data showed that Australian business confidence improved in July, and another report showed that house prices rose more strongly than expected in the second quarter.

Meanwhile, NZD/USD slid 0.35% to 0.8427 and USD/CAD advanced 0.24% to 1.0947.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.23% to 81.70, not far from last week's 11-month peaks of 81.78. offers an extensive set of professional tools for the financial markets.

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