The U.S. dollar and the Japanese yen strengthened against their major counterparts in European deals on Tuesday, as European stocks extended their slide after a closely watched survey on German economic sentiment for October fueled concerns about a Eurozone recession.
After a recent series of disastrous data, a closely-watched survey released today showed that German investor confidence deteriorated for the tenth successive month in October, turning negative for the first time since late 2012. The ZEW Indicator of Economic Sentiment dropped to -3.6 from 6.9 in September, far worse than the zero reading expected by economists.
"Geopolitical tensions and the weak economic development in some parts of the Eurozone, which is falling short of previous expectations, are a source of persistent uncertainty. These factors are tarnishing growth expectations in Germany," ZEW President Clemens Fuest said.
Another report from Eurostat showed that Eurozone industrial production logged a bigger than expected decline in August after recovering last month. Industrial output fell 1.8 percent from the previous month versus forecasts for a 1.6 percent fall.
The German DAX fell 0.6 percent, France's CAC 40 lost 0.8 percent and the U.K.'s FTSE 100 edged down by 0.3 percent from their previous close.
The yen and greenback, being safe-haven assets, tend to gain in times of financial turbulence and vice-versa.
The greenback advanced to 1.1257 against the Canadian dollar, its strongest since October 6. The next key resistance for the greenback lies around the 1.13 mark.
The greenback drifted up to 1.5939 against the pound, a level not seen since November 2013. An extension of bullish trend may help the buck to find resistance around the 1.585 zone.
U.K. inflation slowed to a five-year low in September, data from the Office for National Statistics showed.
Consumer price inflation eased more-than-expected to 1.2 percent in September from 1.5 percent in August. Economists had forecast the rate to slow marginally to 1.4 percent.
Reversing from early multi-day lows of 1.2767 against the euro and 0.9468 against the franc, the greenback rose to 1.2639 and 0.9554, respectively. The greenback is poised to target resistance around 1.25 against the euro and 0.97 against the franc.
The greenback strengthened to 0.8717 against the aussie and 0.7841 against the NZ dollar, coming off from early multi-day lows of 0.8811 and 0.7916, respectively. The greenback may possibly test resistance around 0.86 against the aussie and 0.775 against the kiwi.
Following similar pattern, the yen rose back to 106.79 against the greenback, heading towards its early near 5-week high of 106.75. If the yen continues its uptrend, it may find resistance around the 105.00 mark.
In economic news, Japan's producer prices were down 0.1 percent on month in September, the Bank of Japan said, coming in at 106.3.
That was in line with forecasts following the 0.2 percent decline in August.
The yen advanced to a 1-year high of 135.09 against the euro and a fresh 8-month high of 111.84 against the Swiss franc, off early 4-day lows of 136.53 and 112.95, respectively. On the upside, the yen may test resistance near 134.00 against the euro and 111.00 against the franc.
The yen hit 170.37 against the pound, its highest since September 8, when it hit a 5-1/2-month peak. The next possible resistance for the yen lies around the 169.00 region.
After declining to multi-day lows of 94.50 against the aussie and 84.90 against the kiwi in the previous session, the yen reversed way and was trading at 93.18 and 83.81, respectively. Next key resistance for the yen is seen around 93.00 against the aussie and 83.00 against the kiwi.
The yen that fell to 95.83 against the loonie at 10:15 pm ET rebounded, climbing to a 1-1/2-month high of 94.89. Further uptrend may see the yen finding resistance around the 94.00 level.
