Investing.com - The euro trimmed gains against the dollar on Tuesday, following the release of mixed euro zone data earlier in the session, while the yen remained broadly stronger amid heightened risk aversion.
EUR/USD was last up 0.72% to 1.2526, after rising to more than three-week highs of 1.2569 earlier.
The single currency touched session highs after data showing German economic sentiment improved to its highest level since May this month, indicating that conditions are becoming more favorable.
The ZEW Centre for Economic Research said that its index of German economic sentiment jumped to 34.9 from 11.5 in November.
The report came after survey data showed that euro zone private sector activity grew at a slightly faster rate in December, but the rate of expansion was still one of the weakest seen over the past year.
The euro area composite output purchasing managers’ index, which measures the combined output of both the manufacturing and service sectors, rose to a two month high of 51.9, off November’s 16-month low of 51.1.
Germany’s private sector expanded at the slowest rate in 18 months while French private sector activity remained in contraction territory.
EUR/JPY was down 0.54% to 145.72, after falling to lows of 144.97 earlier.
The dollar was also weaker against the yen, with USD/JPY down 1.20% to 116.45, after falling as low as 115.58 earlier.
Demand for the yen was boosted after data overnight showing that factory activity in China contracted for the first time in seven months in December.
The preliminary reading of China’s HSBC manufacturing PMI came in at 49.5, down from a final reading of 50.0 in November and below forecasts of 49.9.
Risk aversion remained elevated as the rout in oil prices continued on Tuesday. Benchmark Brent crude fell below $60 dollars a barrel for the first time since May 2009 as concerns over sluggish global demand and amply supply continued to weigh.
The ongoing selloff in oil also fuelled concerns over weakening emerging market economies and their currencies.
The Russian ruble fell to fresh record lows against the dollar on Tuesday, after a surprise interest rate hike overnight failed to ease selling pressure on the currency.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.74% to more than two-week lows of 88.06.