EUR/USD Below 1.06 on China Slowing

The dollar traded near a 12-year high against the euro as signs of cooling in China’s economy highlighted the diverging fortunes of the world’s two biggest economies.

The greenback maintained its strength before a report Tuesday forecast to show U.S. retail sales increased by the most in a year, bolstering the case for the Federal Reserve to raise interest rates in 2015. The yen gained after an adviser to Japan’s prime minister said its current levels look weak. Australia’s dollar rebounded after commodity currencies slumped Monday amid concern China will report its slowest economic output since the global recession, in data set for Wednesday.

“The dollar has been trading on the stronger side,” said Sireen Harajli, a strategist at Mizuho Bank Ltd. in New York. “I’m looking for confirmation that the economy was getting better toward the end of the first quarter. The market is anticipating good figures.”