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Forex - EUR/USD extends gains on E.Z. data, ECB in focus

Published 12/01/2015, 10:06 AM
Updated 12/01/2015, 10:06 AM
© Reuters.  Euro pushes highs vs. dollar but gains capped ahead of ECB meeting

© Reuters. Euro pushes highs vs. dollar but gains capped ahead of ECB meeting

Investing.com - The euro extended gains against the U.S. dollar on Tuesday, supported by the release of upbeat economic reports from the euro zone, although investors remained cautious ahead of the European Central Bank's upcoming policy meeting on Thursday.

EUR/USD hit 1.0633 during U.S. morning trade, the pair's highest since Friday; the pair subsequently consolidated at 1.0632, advancing 0.62%.

The pair was likely to find support at 1.0556, Monday's low and a seven-month low and resistance at 1.0690, the high of November 25.

The single currency was boosted after Eurostat reported on Tuesday that the euro zone’s unemployment rate fell to 10.7% in October from 10.8% a month earlier. This is the lowest rate recorded in the euro area since January 2012.

Analysts had expected the jobless rate to hold steady at 10.8% in November.

The report came shortly after research group Markit said its German manufacturing purchasing managers' index rose to 52.9 in November from 52.6 the previous month.

Also in Germany, data showed that the number of unemployed people declined by 13.000 last month, compared to expectations for a 5.000 drop.

Sentiment on the euro remained vulnerable however, as the ECB has been signaling over the past weeks that it is ready to implement additional easing measures in order to boost inflation in the euro zone and support growth.

Meanwhile, speculation that the Federal Reserve will raise interest rates at its December meeting continued to lend broad support to the greenback.

Investors were eyeing a string of U.S. economic reports this week for further indications on the strength of the economy, as the Fed has said that any decision on interest rates will depend on data.

The Institute of Supply Management reported on Tuesday that its manufacturing PMI fell to 48.6 in November from 50.1 the previous month, confounding expectations for a rise to 50.5.

The euro was also higher against the pound, with EUR/GBP rising 0.40% to 0.7048.

In the U.K., Markit reported that the manufacturing PMI fell to 52.7 last month from a revised reading of 55.2 in October. Analysts had expected the index to decline to 53.6 in November.

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