Investing.com - The euro extended early losses against the dollar and the yen on Tuesday, falling to the day’s lows after data showing that the annual rate of inflation in the euro zone rose less than expected last month.
EUR/USD hit lows of 1.0771, the weakest since December 3, down from around 1.0775 ahead of the data.
The single currency fell to fresh eight-month lows against the yen, with EUR/JPY falling 1.02% to 128.08.
The euro zone’s statistical bureau Eurostat reported that the annual rate of inflation in the region rose just 0.2% in December, matching November’s reading and falling short of forecasts for an increase of 0.3%.
Lower energy costs were the largest factor contributing to low inflation, with annual energy costs down 5.9%, according to the report.
Core inflation, which strips out food and energy costs rose 0.9% in December, below forecasts for 1.0% and matching November’s reading.
The weak data added to pressure on the European Central Bank to step up measures to bolster price and economic growth in the single currency bloc. The ECB targets annual inflation of close to, but just below 2%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.33% to 99.27, boosted by the weaker euro.
The dollar index ended 2015 with gains of almost 9%, bolstered by the diverging monetary policy stance between the Federal Reserve and other world central banks, particularly the ECB and the Bank of Japan.