Investing.com - The euro extended losses against the dollar on Tuesday, falling to fresh lows after the European Central Bank indicated that it would speed up the pace of its stimulus program, while robust U.S. housing data boosted the dollar.
EUR/USD hit session lows of 1.1123 and was last at 1.1160, down 1.39% for the day.
The single currency turned sharply lower after senior ECB policymaker Benoit Coeure said Tuesday the bank is planning to speed up the pace of its bond-buying stimulus program before the summer, in order to avoid the “notably lower market liquidity” in late July and August.
The euro remained under pressure after data showed that German investor confidence fell more than expected this month, following a slowdown in growth in the euro area’s largest economy at the start of the year.
The ZEW Centre for Economic Research said that its index of German economic sentiment fell to 41.9, the lowest level since December, from April’s 53.3. Economists had expected a reading of 49.0.
A gauge of current conditions fell to 65.7 in May from 70.2 the previous month, ZEW said.
Recent data showed that Germany’s economy expanded 0.3% in the first quarter of 2015, slowing from 0.7% in the previous three month period.
Fears over the prospects of a Greek default also weighed.
Athens is scrambling to reach a cash-for-reforms deal with its international lenders ahead of a €305 million loan repayment due to the International Monetary Fund on that day.
Elsewhere, EUR/JPY was down 1.05% to 134.31, while USD/JPY climbed 0.35% to 120.41.
The greenback was boosted after data showing that U.S. housing starts rose to the highest level in nearly seven-and-a-half year in April and building permits also jumped.
The Commerce Department the number of building permits issued last month increased by 10.1% last month to 1.143 million units from March’s total of 1.038 million. Economists had expected a more modest 2.2% increase.
U.S. housing starts surged 20.2% in April to 1.135 million units from March’s total of 944,000 units, easily surpassing expectations for an increase of 9.9% to 1.019 million.
The upbeat data boosted hopes for a rebound in second quarter economic growth after a sharp slowdown in the first three months of the year.
Investors were turning their attention to Friday’s U.S. inflation data and Wednesday’s minutes of the Federal Reserve’s April meeting for fresh indications on the timing of an initial rate hike.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied 01.2% to 95.35, boosted by weakness in the euro.