Euro little changed, despite German economy sentiment; ECB continues to weigh

On Tuesday the euro was little changed vs the greenback, despite growing sentiment on German economy. Expectations for easing by the European Central Bank as soon as this week continued to weigh.

The ZEW index of German economic sentiment rose for a third month to 48.4 in January from 34.9 in December, ahead of forecasts of 40.0. The report spurred hopes that Germany’s economy, the euro zone’s largest would rebound in 2015 after weakening at the end of last year.

The ZEW survey of euro zone economic sentiment increased to a six-month high of 45.2 from 31.8 in December, beating forecasts of 37.6, as Investing.com reports.

EUR/USD was steady at 1.1610 following the release of the data, holding above last Friday’s 11-year trough of 1.1459.

The single currency remained pressured as investors waited to see if the ECB would embark on an outright quantitative easing program at its upcoming meeting on Thursday.

The euro was pressured lower by rising expectations that the ECB will launch a government bond-buying program, in a bid to stave off the threat of deflation in the euro area.

An influencing factor was also uncertainty over the outcome of Greek elections, due to be held on Sunday, with anti-bailout party Syriza leading in the polls.

The euro was higher against the softer yen, with EUR/JPY advancing 0.79% to 137.52, as the safe-haven yen slipped earlier Tuesday after figures showing that economic growth in China remained steady in the fourth quarter.

China’s economy expanded at an annual rate of 7.3% in the three months to December. Economists had expected growth in the world’s second-largest economy to slow to 7.2% from 7.3% in the third quarter. On a quarter-over-quarter basis, China’s economy slowed to 1.5% from 1.9% in the third quarter, compared to forecasts for 1.7%.