Men work at the assembly line in the truck production plant of truck and bus-maker MAN AG in Munich, Germany July 30, 2015.
Germany's gross domestic product (GDP) continued to grow in the fourth quarter of 2016, thanks to high consumer sentiment and a boom in the construction sector, official data showed on Tuesday.
Optimism about the strength of the euro zone economy took a hit on Tuesday as data showed lower-than-expected growth, possibly caused by weaker global trade as protectionist calls grow louder. The year/year figure, 1.2%, was lower than both the 1.7% consensus forecast and the 1.5% number for the previous quarter.
That is down from a rough estimate issued last month of 0.5 percent and caused a revision to the growth rate of the eurozone as a whole - to 0.4 percent compared with an earlier estimate of 0.5 percent.
Greece, which is once again in the headlines over debt troubles, past year slipped out of recession, growing by 0.3%. This means that the German economy started 2017 on an economically strong footing.
Europe's largest economy grew at a quarterly 0.4% in the fourth quarter, or 1.7% in annualized terms.
Capital Economics analyst Jack Allen said the pick-up was largely due to food and energy prices, adding that core inflation was unlikely to surge in the coming months and wage growth was still subdued in Germany. The bloc's economy is expected to remain robust this year.
The change is partly down to a dismal performance of industrial output, which had its biggest fall in more than four years in December.
Against this background, EURUSD might have been expected to weaken, given that it makes a tapering soon of the economic stimulus now provided by the European Central Bank less likely.
Faster growth came on a spike in consumer demand in France and Spain while Germany's export-driven economy remained on a solid course.