LONDON — The euro slid against the dollar in reaction to news of a drop in sentiment among investors in Germany, Europe's biggest economy, traders said.
In London morning deals, the European single currency fell to 1.4367 dollars from 1.4382 dollars late on Monday.
Against the Japanese unit, the dollar dropped to 90.59 yen from 90.75 yen on Monday.
German investor sentiment fell for a fourth month running in January as Europe's biggest economy braced for a "burdensome and long" recovery, the ZEW economic research institute said on Tuesday.
The ZEW indicator of German economic sentiment fell more steeply than forecast to an indexed 47.2 points, the lowest level since July 2009.
"The assessment of the financial market experts suggests that we will see an economic recovery in 2010 at best, but not a clear economic upswing," a statement quoted ZEW president Wolfgang Franz as saying.
"The way out of the recession is burdensome and long," he added.
Analysts polled by Dow Jones Newswires had expected the German financial sector barometer to just edge lower to 49.8 points.
"Germany's January ZEW survey provided more negative news for the euro," said Jane Foley, analyst at online trading firm Forex.com.
"Greece continues to contribute most of the negative pressure on the euro," she added however.
International rating agency Moody's on Tuesday said it was maintaining a negative outlook on Greece because it was unclear whether the government could implement a plan to shore up public finances.
"Given the lack of certainty surrounding the Greek government's ability to implement the programme, Moody's negative outlook remains unchanged," the agency said.
The Greek government, which last month suffered a credit downgrade from all three leading ratings agencies, is struggling to overcome a huge debt and public deficit that have sparked consternation among its eurozone partners.
Elsewhere on Tuesday, the British pound rallied after official data revealed a larger-than-expected spike in inflation data, dealers said.
Annual inflation in recession-hit Britain surged to 2.9 percent in December, partly owing to changes in taxation levels, data showed on Tuesday.
Consumer Prices Index (CPI) inflation increased by 0.6 percent in December from November.
Market expectations had been for an annual gain of 2.5 percent and a month-on-month increase of 0.2 percent, according to analysts polled by Dow Jones Newswires.
Analysts said the data could force the Bank of England to begin raising interest rates from a record low level of 0.5 percent earlier-than-expected.
In London on Tuesday, the euro was changing hands at 1.4367 dollars against 1.4382 dollars late on Monday, 130.15 yen (130.52), 0.8747 pounds (0.8804) and 1.4768 Swiss francs (1.4738).
The dollar stood at 90.59 yen (90.75) and 1.0279 Swiss francs (1.0248).
The pound was at 1.6424 dollars (1.6334).
On the London Bullion Market, the price of gold increased to 1,138 dollars an ounce from 1,134.50 dollars on Monday.
