Investing.com - The euro hit session highs against the dollar on Tuesday after data showed that euro zone consumer prices rose for the first time in six months in May, while hopes for a breakthrough in Greek debt negotiations also boosted the single currency.
EUR/USD touched highs of 1.0995 up from around 1.0978 ahead of the data.
The European Union’s statistics agency Eurostat said the euro zone consumer price index rose by 0.3% from a year earlier in May, following a flat reading in April. Economists had forecast an increase of 0.2%.
Underlying inflation, which excludes prices for energy, food and alcohol, also picked up. Annual core inflation rose 0.9% from a record low of 0.6% in April.
Cheaper oil prices continued to act as a drag on inflation. Energy prices were down by 5% on a year-on-year basis from -5.8% in April.
The data indicated that the trillion-euro quantitative easing program launched by the European Central Bank in January is having an effect on the region’s economy.
The euro’s gains were held in check amid ongoing uncertainty over stalled negotiations on a cash-for-reforms deal for Greece.
Prime Minister Alexis Tsipras said Tuesday that Greece submitted a “comprehensive proposal” to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.
The euro was near two-week highs against the broadly weaker yen, with EUR/JPY up 0.4% to 136.87.
The dollar rose to fresh 12-and-a-half year highs against the yen on Tuesday as upbeat data on U.S. manufacturing activity and construction spending bolstered expectations for higher interest rates.
USD/JPY hit highs of 125.06, the most since November 2002 before pulling back to 124.72.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased to 97.24, still not far from the five week highs of 97.88 hit last Wednesday.