NEW YORK: The US dollar weakened against the euro on Tuesday on a better than expected survey of German sentiment and was steady against the Japanese yen after Japanese Prime Minister Shinzo Abe said he would call an early election to seek a fresh mandate for his economic policies.
German analyst and investor sentiment rose in November for the first time in almost a year, surpassing expectations and raising hopes of an improvement in Europe's biggest economy after it dodged recession in the third quarter.
The data lifted the euro as high as $1.2540. It last traded at $1.2520.
"The German ZEW index came in much, much better than expected," said Sireen Harajli, a foreign exchange strategist at Mizuho Corporate Bank in New York.
The euro temporarily pared some gains after data showed that U.S. producer prices unexpectedly rose in October.
The greenback has been broadly gaining against the euro and the yen as the Federal Reserve is expected to begin raising interest rates next year, while the European and Japanese central banks continue highly stimulative policies meant to boost growth in the regions.
"Fundamentally the U.S. economy continues to improve and the Fed is looking at normalizing policy next year. Europe, Japan and England will not be heading in that direction," said Harajli.
Japan's Abe also postponed an unpopular sales tax rise, a day after data showed the economy had slipped back into recession.
The yen neared a seven-year low against the dollar at 117.03 yen earlier on Tuesday before some investors unwound positions, leaving the Japanese currency largely stable against the greenback.
The dollar last traded at 116.56 yen.
Some traders say the U.S. dollar rally may need new impetus to continue its bull run.
"All of the news is priced into it and we will really need to see further poor data out of Europe or strong data from the U.S. to move it on," said Graham Davidson, a spot currency trader with National Australia Bank in London.
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