Forexpros – The euro turned lower against the U.S. dollar on Tuesday, pulling away from a two-day high as the release of mixed U.S. economic data hit market sentiment, spurring demand for the safe haven greenback.
EUR/USD retreated from 1.3172, the pair’s highest since Friday, to hit 1.3115 during U.S. morning trade, slipping 0.18%.
The pair was likely to find support at 1.3032, the low of April 9 and resistance at 1.3172, the session high.
In the U.S., official data showed that industrial production was unexpectedly flat for the second consecutive month in March, confounding expectations for a 0.3% increase.
The report came after official data showed that the number of building permits issued in the U.S. increased unexpectedly in March, rising to the highest level since September 2008, while housing starts dropped significantly, painting a mixed picture of the U.S. housing sector.
The number of building permits issued last month rose 4.5% to a seasonally adjusted 0.747 million, confounding expectations for a modest decline of 0.7% to 0.710 million.
But U.S. housing starts fell to the lowest level since October, dropping 5.8% to a seasonally adjusted 0.654 million from a revised 0.694 million units in February. Economists had forecast housing starts to rise 1.0% in March to 0.705 million units.
Concerns over the debt crisis in the euro zone eased earlier, after an auction of Spanish short-term government bonds saw the country raise the full targeted amount of EUR3 billion, but at sharply higher yields.
However, sentiment on the euro remained fragile amid uncertainty over whether Spain’s government can meet deficit reduction targets in the face of a looming recession.
Elsewhere, data showed that German economic sentiment improved unexpectedly in April, rising for the fifth consecutive month.
The ZEW Centre for Economic Research said that its index of German economic sentiment increased to 23.4 in April from the previous month’s reading of 22.3. Analysts had expected the index to decline to 20.0.
Meanwhile, the euro was hovering close to a 19-month low against the broadly stronger pound, with EUR/GBP dropping 0.42% to hit 0.8231 and remained only fractionally higher against the yen, with EUR/JPY up 0.08% to trade at 105.80, off an earlier high of 106.31.
Also Tuesday, official data showed that the rate of consumer price inflation in the single currency bloc was 2.7% in March, up from a preliminary estimate of 2.6% and unchanged from February.
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