Euro Hangs Above Three-Year Lows on Eurozone Growth Concerns

By Yasin Ebrahim

Investing.com – The euro moved off three-year lows against the dollar Tuesday, but remained under pressure amid ongoing signs of weakness in Germany, the euro zone's largest economy.

EUR/USD fell 0.29% to $1.0802, but trading as low as $1.0786 for the first time since April 2017, as investor sentiment in Germany deteriorated more than expected in February, adding to concerns about the ongoing weakness in the euro zone.

"The feared negative effects of the coronavirus epidemic in China on world trade have been causing a considerable decline of the Zew Indicator of Economic Sentiment for Germany," said Achim Wambach, Zew president.

The ongoing worries about the impact of the coronavirus on global growth is expected to maintain demand for the dollar against its rivals.

"Only when the virus issue dies down and the impact from all the stimulus around the world starts to become apparent, will we see downward pressure on the USD," Brad Bechtel, managing director, Jefferies in New York, said in a note.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.28% to 99.29.

The advance in the dollar comes amid mixed U.S. economic data as a regional manufacturing survey topped forecasts but housing data disappointed.

The Empire State manufacturing index rose 8.1 points in February to a reading of 12.90, the New York Federal Reserve said Tuesday.

The National Association of Home Builders/Wells Fargo Housing Market Index fell one point to 74 in February, missing economists' forecasts of 75.

The pound, meanwhile, was roughly unchanged against the dollar after giving up gains as traders weighed up mixed jobs data against growing expectations that the U.K. will unveil fiscal measures intended to boost growth.

Britain's new finance minister Rishi Sunak said he would deliver the budget as planned in three weeks.

GBP/USD fell 0.06% to $1.2998 after hitting a high of $1.3049

USD/JPY fell 0.02% to Y110.04 as renewed coronavirus worries triggered demand for safe-haven yen.

USD/CAD climbed 0.15% to C$1.3255 as a surprise contraction in manufacturing activity in Canada and a fall in oil prices weighed on the loonie.

"We continue to expect overall Canadian economic growth will remain on the soft side in early 2020 after little or no growth in the last quarter of 2019," RBC said.