Investing.com – The euro edged higher against the dollar on Tuesday after data showed that German economic confidence improved to a one-year high this month, as a deadlock between Greece and the euro zone on the country’s bailout continued.
The ZEW Centre for Economic Research said that its index of German economic sentiment rose by 4.6 points to 53.0 this month from January’s reading of 48.4. It was the highest reading since February 2014, but was still below expectations of 55.0.
Sentiment among financial market experts was boosted by the unexpectedly strong rate of economic growth in the fourth quarter of 2014 and by the European Central Bank’s quantitative easing program the report said.
EUR/USD touched session highs of 1.1400 following the data, up from around 1.1385 earlier.
Gains in the single currency remained muted following a breakdown in talks between Greece and euro zone finance ministers on a new financing arrangement for the country on Monday.
Greece’s current €240 billion bailout is due to expire at the end of the month and the new Greek government does not want it extended. Athens rejected a proposed six-month extension of the bailout on Monday, calling it “unacceptable”.
Athens has until Friday to request an extension otherwise its bailout will expire on February 28 and the country will run out of money, which could trigger the country’s exit from the euro zone.
The euro rose to session highs against the yen, with EUR/JPY up 0.61% to 135.38 and was also higher against sterling, with EUR/GBP rising 0.20% to 0.7403.
In the U.K. data on Tuesday showed that the annual rate of inflation slowed to a record low in January, pulled down by falling oil prices.
The annual rate of consumer inflation slowed to 0.3% last month from 0.5% in December. It was the lowest rate of inflation since records began in 1989.
Consumer prices fell 0.9% in January from a month earlier the ONS said, compared to expectations for a drop of 0.8%.
However, core inflation, which strips out volatile food and energy costs, rose 1.4%, up from 1.3% in December.