$A firms as traders get gloomy on Germany
The Australian dollar has strengthened as pessimism about the German economy weighed on the euro.
At 1700 AEDT on Tuesday, the local currency was trading at 87.85 US cents, up from 87.34 cents on Monday.
A weakening of the euro ahead of Tuesday night's release of the Zew indicator of German economic sentiment helped boost the Australian dollar against the greenback, Easy Forex senior dealer Franciso Solar said.
"There wasn't any large catalyst to sell Aussie outright, it was more on the euro with this impending data coming out," he said.
The Australian dollar tends to find support in such situations, Mr Solar added.
Analysts are expecting the Zew reading for October to suffer a sharp fall.
The Australian dollar suffered a short lived fall during morning trade after Reserve Bank assistant governor Guy Debelle said the currency was overvalued.
It also took another small hit after the National Australia Bank's survey for September showed business confidence dropping to the lowest point in a year.
