Investing.com - The euro backed away from session lows on Tuesday after the European Commission raised its growth forecast for the euro zone this year, as investors looked ahead to U.S. data on service sector activity and trade later in the day.
EUR/USD was at 1.1119, still down 0.24% for the day, after falling to lows of 1.1066 earlier.
In its quarterly forecasts the EC said it now expects the euro zone economy to grow to 1.5% in 2015 up from 1.3% three months ago.
The Commission also revised up its forecast for inflation this year to 0.1% from its earlier forecast for a decline of 0.1% and said it expects inflation of 1.5% in 2015 up from 1.3%.
But it slashed its forecast for Greek economic growth to just 0.5% this year down from 2.5% previously and warned that the recovery has stalled since snap elections at the end of last year.
The euro remained under pressure following media reports that the International Monetary Fund pushed the euro zone to cut Greece’s debt burden last month, amid fears that its debt is becoming unsustainable.
Athens is scrambling to reach an agreement with its creditors on a package of economic reforms for more bailout funds before it runs out of cash.
Elsewhere, the euro was steady against the yen, with EUR/JPY at 133.95, off session lows of 133.11.
The greenback remained supported after recent economic reports indicated that the U.S. recovery had turned a corner after a recent bout of weakness.
The dollar has weakened in recent weeks after disappointing data prompted investors to delay expectations on the timing of an initial rate hike by the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.16% to 95.75, staying above a two-month low of 94.47 set last Thursday.