Investing.com - The euro pulled back from lows against the dollar on Tuesday, helped by solid gains against the pound but the single currency was held in check after weak German inflation data raised concerns over weakening demand in the euro zone.
EUR/USD pulled away from session lows of 1.3359, to hit 1.3396 during European late morning trade, still 0.07% lower for the day.
The pair was likely to find support at 1.3343, Friday’s low and a seven-week low and resistance at 1.3450.
Data released on Tuesday showed that the annual rate of inflation in Germany, the euro zone’s largest economy, slowed to 1.2% in October, the lowest level in more than three years, from 1.4% in September.
The data added to concerns over growing deflationary pressures in the euro area, after the annual rate of inflation across the euro zone slowed to a four year low of 0.7% in October.
The downward trend in euro area inflation prompted the European Central Bank to cut rates to a record low 0.25% on Thursday, sparking a broad selloff in the euro.
The dollar remained broadly stronger after last week’s strong U.S. jobs report spurred speculation that the Federal Reserve may start winding down its USD85 billion-a-month asset purchase program before the end of the year.
The euro rose to one-week highs against sterling, with EUR/GBP advancing 0.58% to 0.8434.
The pound weakened across the board after data showed that the annual rate of inflation in the U.K. slowed to the lowest level in more than a year in October.
The Office of National Statistics said the annual rate of inflation in the U.K. slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.
Elsewhere, the dollar was trading close to two-month highs against sterling, with GBP/USD down 0.65% to 1.5884 after falling as low as 1.5854 earlier.
