Investing.com - The euro extended gains against the U.S. dollar on Tuesday, boosted by strong economic sentiment data from Germany after European Central Bank President Mario Draghi signaled on Monday the possibility for further easing measures.
EUR/USD hit 1.2540 during European morning trade, the session high; the pair subsequently consolidated at 1.2532, climbing 0.63%.
The pair was likely to find support at 1.2397, the low of November 14 and resistance at 1.2617, the high of October 31.
In a report, the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 15.1 points to a four-month high of 11.5 this month from October’s reading of minus 3.6.
Analysts had expected the index to improve by 4.5 points to 0.9 in November.
In addition, the index of euro zone economic sentiment increased to 11.0 in October from 4.1 in September, above expectations for an increase to 4.3.
The data came a day after ECB President Mario Draghi reiterated that the bank was willing to implement additional stimulus measures to prevent low levels of inflation from becoming entrenched.
In testimony to the European Parliament Mr. Draghi said the central bank could expand its asset purchase program to include government bonds.
Meanwhile, demand for the safe-haven dollar remained supported after data on Monday showed that Japan’s economy contracted by an annualized 1.6% in the third quarter, compared to forecasts for growth of 2.5%.
Investors were also cautious as Japan's Prime Minister Shinzo Abe was expected to announce later Tuesday that a sales-tax increase due to come into effect next year would be delayed and to call for elections to be held next month.
The euro was also higher against the pound, with EUR/GBP gaining 0.53% to 0.8002.
In the U.K., the Office for National Statistics said the rate of consumer price inflation accelerated to a seasonally adjusted 1.3% last month from 1.2% in September. Analysts had expected U.K. CPI to hold steady at 1.2% in October.
Month-over-month, consumer price inflation inched up 0.1% in October, in line with expectations and after holding flat in September.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.5% last month, unchanged from September. Analysts had expected core prices to rise 1.6% in October.