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Forex - Euro extends losses after German ZEW miss

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Investing.com -

Investing.com - The euro extended losses against dollar, the yen and the pound on Tuesday after a report showed that investor confidence in Germany, the euro zone's largest economy slumped to the lowest level since December 2012 this month.

EUR/USD was down 0.28% to 1.3344 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 pair was likely to find support at the 1.3300 level and resistance at 1.3400.

The ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 8.6 this month, down from 27.1 in July. It was the weakest reading in 20 months and was well below economists' forecasts of 18.2.

The current conditions Index deteriorated to a seven month low of 44.3 from 61.8 in July, worse than expectations for a decline to 55.5.

The report said the decline in economic sentiment was likely connected the impact of ongoing geopolitical tensions on the German economy.

Recent economic reports have indicated that sanctions on Russia as a result of the conflict in Ukraine are acting as a drag on the German economy. Germany is Russia's largest trading partner in Europe.

The ZEW noted that industrial production and incoming orders suggest "markedly reduced investment activities by German firms against the backdrop of uncertain sales prospects."

The ZEW said the report indicated that economic growth in Germany will be weaker than expected in 2014.

Investors were looking ahead to Thursday's preliminary data on second quarter growth in the euro zone, as well as in Germany and France, amid expectations for a weak reading.

The euro zone was also to publish revised data on consumer prices for July on Thursday, with the annual rate of inflation expected to remain unchanged at 0.4%, well below the ECB's 2% target.

The ECB cut rates to record lows in June in a bid to stave off growing deflationary pressures in the region and concerns over the diverging monetary policy stance between it and its major peers have continued to pressure the single currency lower.

The euro fell to session lows against the yen, with EUR/JPY down 0.18% to 136.45 from 136.43 ahead of the data, and not far from the eight-and-a-half month lows of 135.71 reached on Friday.

The single currency was also weaker against the pound, with EUR/GBP sliding 0.21% to 0.7957, down from 0.7962 earlier.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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