Investing.com - The euro slid to session lows against the dollar on Tuesday, closing in on a nine-year trough, after data showing euro zone private sector activity grew at a slower pace than initially estimated in December, keeping pressure on the European Central Bank to step up measures to spur growth.
EUR/USD was last down 0.22% to 1.1905, not far from the lows of 1.1851 struck on Monday, the weakest level since February 2006.
The euro backed off session highs after the Markit composite purchasing managers’ index, which measures activity in the manufacturing and services sectors in the euro area, was revised down to 51.4 in December from the preliminary estimate of 51.7. The figure was still higher than November’s reading of 51.1.
On the index, a reading below 50.0 indicates activity is slowing, while a reading above 50.0 indicates it is increasing.
“The euro zone will look back on 2014 as a year in which recession was avoided by the narrowest of margins, but the weakness of the survey data suggests there’s no guarantee that a renewed downturn won’t be seen in 2015,” Chris Williamson, Markit’s chief economist said.
"The weakness of the PMI in December will add to calls for more aggressive central bank stimulus, including full-scale quantitative easing, to be undertaken as soon as possible."
The single currency has weakened across the board since ECB President Mario Draghi said Friday the risk of it not fulfilling its mandate of price stability is higher now than six months ago. The remarks indicated that the likelihood of full blown quantitative easing has increased ahead of the ECB’s meeting on January 22.
Data on Monday showed that German inflation fell to a five year low in December, adding to concerns over the threat of deflation in the region.The euro zone is to release data on inflation on Wednesday and economists have forecast an annualized decline of 0.1%, which would be the first drop since 2009.
The euro was also pressured lower by uncertainty over Greece’s future in the euro zone if far-left anti-austerity party Syriza won elections due to be held later this month.
The common currency extended losses against the firmer yen, with EUR/JPY down 0.87% to two month lows of 141.51.
The yen was also higher against the dollar, with USD/JPY sliding 0.64% to 118.85 from 119.62 late Monday.
The safe haven yen was boosted by declines in global equity markets, as falling oil prices and concerns over the outlook for the euro zone economy sparked a selloff in stocks.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was at 91.79, not far from Monday’s nine-year peaks of 92.05, supported by weakness in the euro.