Euro Higher As German GDP Improves, ZEW Economic Sentiment Hits 6-Month High

The euro traded higher against its key counterparts in the European session on Tuesday, as German economic growth accelerated in the third quarter and ZEW economic sentiment indicator rose to a 6-month high in November, boosting confidence in Europe's powerhouse.

Data from the Federal Statistical Office showed that Germany's gross domestic product grew 0.8 percent sequentially, faster than the 0.6 percent expansion logged in the second quarter. The growth rate was forecast to remain at 0.6 percent.

On a yearly basis, GDP climbed calendar-adjusted 2.8 percent, following the 2.3 percent growth seen a quarter ago. GDP was expected to climb again by 2.3 percent.

Survey data from Mannheim-based think tank ZEW showed that Germany's economic confidence rose to a 6-month high in November.

The ZEW Indicator of Economic Sentiment for Germany rose to 18.7 in November from 17.6 in October. This was the highest score since May, when the reading was 20.6.

Nonetheless, the score was below the expected level of 19.5.

Speaking at an ECB conference in Frankfurt, the European Central Bank President Mario Draghi said that the bank's "forward guidance" has evolved into a full-fledged monetary policy tool and has been successful. "Forward guidance has become a full-fledged monetary policy instrument," Draghi told. The currency showed mixed trading in the Asian session. While it held steady against the greenback and the franc, it rose against the pound and the yen. The single currency rose to near a 3-week high of 0.8955 against the pound, compared to 0.8894 hit late New York Monday. Continuation of the euro's uptrend may see it challenging resistance around the 0.91 region. Data from the Office for National Statistics showed that UK consumer prices logged a steady growth in October and output price inflation slowed further.

Consumer prices climbed 3 percent year-on-year in October, the same pace as seen in September. Prices were forecast to rise 3.2 percent. The euro strengthened to 1.1730 against the greenback, its strongest since October 26. The euro is seen finding resistance around the 1.185 area. The 19-nation currency climbed to near a 2-week high of 1.1664 against the Swiss franc from Monday's closing value of 1.1624. If the euro-franc pair extends rise, 1.18 is likely seen as its next resistance level. The euro spiked up to near a 3-week high of 133.38 against the yen, from an early low of 132.48. The next possible resistance for the euro-yen pair is seen around the 134.5 mark. The common currency advanced to an 11-day high of 1.4943 against the loonie and near a 3-week high of 1.5381 against the aussie, off its early lows of 1.4849 and 1.5279, respectively. On the upside, 1.51 and 1.55 are likely seen as the next resistance levels for the euro against the loonie and the aussie, respectively. The European currency extended early gains to near a 3-week high of 1.7085 against the kiwi and stabilized thereafter. Next key resistance for the euro is seen around the 1.72 region. Looking ahead, U.S. producer prices for October are due in the New York session.

At 12:30 pm ET, the Bank of England Deputy Governor Jon Cunliffe speaks at the Oxford Economics Society.