NEW YORK (Dow Jones)--The euro extended its decline to session lows against the dollar and yen Tuesday as U.S. stocks and oil prices slumped.
The euro is typically sold off with other higher-yielding currencies on a flight to safer assets, such as the dollar, when these indicators of risk appetite dip.
The euro declined as low as $1.3941 and Y129.35.
Nevertheless, the euro is still trading inside the narrow range it has carved out since June.
"Over the past several weeks the currency markets have repeatedly disappointed the dollar bulls and the dollar bears, and the lesson learned is that it would likely take a significant economic, earnings or policy surprise to jolt the foreign exchange markets into a new orbit," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank in New York.
Tuesday morning in New York, the euro was at $1.3950 from $1.3994 late Monday, and the dollar was at Y92.87 from Y92.95, according to EBS. The euro was at Y129.55 from Y130.08. The U.K. pound was at $1.6269 from $1.6231. The dollar was at CHF1.0875 from CHF1.0831.
The euro decline Tuesday comes in spite of some encouraging data that would usually support risk appetite.
June U.S. retail sales rose more than expected and second-quarter earnings from Goldman Sachs Group Inc. (GS) were very strong.
However, traders had already priced-in strong results than at first anticipated. They seem to be practicing the adage, "Buy the rumor, sell the fact."
The euro had been finding limited support ahead of the releases too, disappointing some currency analysts given a strong finish for U.S. stocks Monday.
The common currency may have been weighed down by weaker-than-expected euro zone data.
The Center for European Economic Research, known as ZEW, reported that German economic sentiment fell in July for the first time since October. Meanwhile, overall euro-zone industrial production posted its first month-on-month rise in nine months in May, but the figure fell flat of economist expectations.
"[The] data raises doubts over the scope and pace of the recovery, and undermines the euro," said Stuart Bennett, a senior foreign exchange strategist at Calyon Credit Agricole CIB in London.
Meanwhile, the pound remains up on the day, despite euro weakness, on encouraging U.K. reports.
The U.K. BRC June same-store retail sales gained 1.4% on year, compared to expectations for a 0.6% rise. Also, the Royal Institution of Chartered Surveyors said sentiment in the housing market in England and Wales rose to its highest level for 21 months in June.
However, some suggest it may be a good time to sell the pound into rallies.
"[We] are moving into summer trading when global financial assets and corporate investment decisions are delayed," Neil Jones of Mizuho Corporate Bank noted in London, while the pound "benefits under conditions of asset/investment purchases."
