The New Zealand dollar has risen to its highest in more than five months against the euro after German inflation slows to the lowest level in more than five years, increasing the prospect the European Central Bank will need to add further stimulus to prevent deflation.

The kiwi touched 64.68 euro cents, and was trading at 64.47 cents at 8am on Tuesday in Wellington, from 63.86 cents at 5pm on Monday.

It advanced to US76.95 cents from US76.28c.

The euro is under pressure ahead of Greek elections later this month which may result in a left-wing government cancelling austerity measures and seeking to renegotiate its debt, which could see it exit the European common currency.

Adding to the euro’s woes, a report on Monday showed German inflation, harmonised for comparison with other European countries, fell to a 0.1 per cent annual rate in December, from 0.5 per cent in November and below economist expectations.

“The euro remains under pressure amid expectations of ECB policy easing and political uncertainty in Greece,” David Croy, senior rates strategist at ANZ Bank New Zealand, said in a note. “While this cross may be inflated to many, the lower German inflation levels have ensured the euro continues to lack support.”

In New Zealand on Tuesday, Auckland real estate agency Barfoot & Thompson is scheduled to release its latest report on the housing market in the country’s largest city.

On Monday morning, the New Zealand dollar advanced to 95.08 Australian cents from A94.66c. It rose to 50.46 British pence from 49.89p and edged up to 92.10 yen from 91.99 yen.

The trade-weighted index gained to 78.64 from 78.11.