Investing.com - A soaring Philadelphia-area factory gauge sparked demand for the greenback over the euro on Thursday by stoking expectations for the U.S. economy to grow at a faster clip.
In U.S. trading, EUR/USD was down 0.23% at 1.2525, up from a session low of 1.2504 and off a high of 1.2575.
The pair was likely to find support at 1.2441, Tuesday's low, and resistance at 1.2600, Wednesday's high.
Manufacturing activity in the Philadelphia-region expanded at its fastest rate since December 1993 in November, fueling optimism over the U.S. economic outlook, official data showed on Thursday.
The Federal Reserve Bank of Philadelphia reported earlier that its manufacturing index improved to 40.8 this month from 20.7 in October.
Analysts had expected the index to decline to 18.5 in September, and the surprise jumped strengthened the U.S. currency against its European counterpart.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
The current new orders index, which reflects the demand for manufactured goods, increased 18 points, to 35.7.
The current employment index rose 10 points in November, to 22.4, and hit a 3½ year high.
Upbeat U.S. inflation data also boosted the dollar by firming expectations that the Fed remains on track to raise interest rates next year.
The Labor Department reported earlier that the U.S. consumer price index was unchanged in October, beating expectations for a 0.1% dip.
On a year-over-year basis consumer prices rose 1.7% last month, unchanged from September, and stronger than market calls for a 1.6% jump.
Core inflation, which strips out volatile food and energy components, rose by 0.2% during the month, pushing the annual rate up to 1.8%, both figures in line with market forecasts, which fueled dollar demand.
Also from the Labor Department, data released earlier revealed that the number of Americans filing new claims for unemployment benefit fell by 2,000 last week, to 291,000. Economists had expected a fall to 286,000, thought it was still the tenth straight week that initial claims remained below 300,000.
The number of continuing claims also fell, to 2.33 million, the lowest level since December 2000.
The euro, meanwhile, softened after data showed that private-sector output slowed to its lowest in 16 months in November.
The euro zone’s services purchasing managers’ index fell to 51.3 this month, while the manufacturing PMI slid to 50.4 from 50.6 in October.
Germany private sector activity fell to a 16-month low, while French private sector output contracted for the seventh consecutive month.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.22% at 0.7987, and down against the yen, with EUR/JPY down 0.05% at 147.99.