The euro climbed to a one-week high against the dollar on Tuesday after first-quarter economic growth figures on the euro zone beat market expectations, dispelling some pessimism over the zone's common currency. Mixed US data and caution ahead of a two-day Federal Reserve meeting pushed the dollar further away from a near two-year high.
Eurozone economic growth accelerated to 0.4% in the first three months of 2019, recovering from a slump in the second half of last year, data showed on Tuesday. The strong data offered some relief to traders after a disappointing manufacturing PMI survey this month and cautious comments from European Central Bank policymakers raised concerns that the broader economy is struggling to gain traction.
"The (overall) data have been coming in better than expected. The euro is the biggest short in the market right now," said Steven Englander, global head of G10 FX research at Standard Chartered Bank in New York. Higher-than-expected growth figures could squeeze some hedge funds who have been amassing large short positions in the euro, worth a net $14.8 billion in the week to April 23.
At 11:33 a.m. (1533 GMT), the euro was 0.16% higher at $1.12025 after the euro zone growth data. The currency was on track to fall 0.13% in April, bringing its year-to-date loss against the greenback to 2.32%. An index that tracks the dollar against the euro, yen, sterling and three other currencies was down 0.24% at 97.619. It hit a 23-month high at 98.330 last Friday.