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Euro falls after weak German sentiment data

The euro weakened against the dollar on Tuesday (Aug 12) as investors weighed a plunge in investor confidence to a 20-month low in Germany, Europe's largest economy.

NEW YORK: The euro weakened against the dollar on Tuesday (Aug 12) as investors weighed a plunge in investor confidence to a 20-month low in Germany, Europe's largest economy.

The ZEW research institute's indicator of economic sentiment in Germany dived 18.5 points to 8.6 points August, its lowest level since December 2012. Analysts had expected only a minor fall.

"The decline in economic sentiment is likely connected to the ongoing geopolitical tensions that have affected the German economy by now," ZEW said.

The institute did not elaborate further. The German economy ministry said in a report earlier that the Russia-Ukraine crisis and turmoil in the Middle East were weighing on the economy.

"German investor morale has now fallen for eight straight months, showing how geopolitical instability in Ukraine was taking a bigger toll on investor attitudes," said Joe Manimbo of Western Union Business Solutions.

"With geopolitics in Ukraine sapping confidence in Europe, it increases already elevated pressure on the European Central Bank to bring on stronger measures to safeguard its sputtering economy. Could the euro be on the brink of another big move lower?" he said.

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