Investing.com - The euro remained close to seven-month lows against the dollar on Tuesday despite data showing that German investor confidence rebounded this month, as the diverging monetary policy outlook between the Federal Reserve and the European Central Bank weighed.
EUR/USD hit lows of 1.0643, the weakest since April 16 and was last at 1.0662, off 0.22% for the day.
The ZEW Centre for Economic Research said German economic sentiment improved this month, one month after the Volkswagen (DE:VOWG) emissions scandal sent the index sharply lower.
The ZEW index of economic sentiment rose to 10.4, up from October’s reading of 1.9, which was a 12-month low.
Economists’ had forecast a reading of 6.0.
The upbeat data indicated that growth in the euro zone’s largest economy will remain on track in the final quarter of 2015.
The single currency remained on the back foot as the diverging monetary policy outlook between the Fed and the ECB weighed.
Demand for the dollar continued to be underpinned by expectations that the Fed will hike interest rates as soon as next month.
U.S. inflation data due out later in the day was expected to provide more clarity on prospects for a December rate hike.
In contrast, the ECB is expected to expand its quantitative easing program and possibly cut rates further into negative territory at its December meeting.
The euro also remained under pressure amid concerns that the terrorist attacks in Paris could undermine the already fragile economic recovery in the region.
The euro was lower against the yen and the pound, with EUR/JPY easing 0.12% to 131.44 and EUR/GBP down 0.18% to 0.7016.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 99.59, after rising to seven month peaks of 99.74 earlier.