LONDON: The euro slipped on Tuesday but stayed within recent trading ranges, as recent economic data surpassed market expectations, making investors wary of pushing the single currency lower.
Investor sentiment towards Germany climbed to a record high, Monday's data showed, as the euro zone's largest economy fueled a brisk economic recovery in the region, and region-wide growth was robust in October, according to a survey.
"While risky assets have been robust, currency markets have been generally sidelined as there are very little event risks on the horizon and until we see a big surprise in economic data, currency markets will be trapped in tight ranges," said Thu Lan Nguyen, a FX strategist at Commerzbank AG in Frankfurt.
The euro edged 0.2 percent lower to $1.1591 in early trades. Trading ranges in the single currency have become narrower since the European Central Bank said on Oct. 26 it was cutting back its monthly bond purchases, with the euro remaining in a half percent daily trading range against the dollar.
However, in the general risk-on environment emerging-market currencies saw some flows as carry trades regained favour. The Brazilian real rose 2 percent on Monday, its biggest-single-day rise in nearly six months, and the Indonesia rupiah pushed higher.
The dollar index gained against a basket of six major currencies to 94.913, nearing a 10-day peak of 95.077 reached on Monday.
The dollar had been solid after strong US services and factory data released before the weekend backed expectations that the Federal Reserve will raise interest rates next month and tighten further in 2018.
Australia's central bank on Tuesday left its cash rate at a record-low 1.5 percent, and it looked likely to remain sidelined for months, with inflation low and debt-laden consumers cautious .
The Australian dollar was little changed at $0.7665 after gaining about 0.5 percent on Monday against a stronger US dollar.
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