Investing.com - The dollar remained remained close to session highs against the euro on Monday after data showed that U.S. factory orders rose at the fastest pace in eight months in March, adding to indications that the economic recovery is regaining momentum.
EUR/USD was down 0.49% to 1.1143, not far from the session lows of 1.1123.
The Commerce Department said new orders for U.S. factory goods rose 2.1% in March, boosted by demand for transportation equipment, after a revised 0.1% decline in February. Economists had forecast a 2.0% increase.
However, orders excluding transportation equipment were flat in March after edging up 0.1% in February, pointing to underlying weakness as the stronger dollar continued to weigh.
Demand for the greenback continued to remain underpinned after data late last week indicated that the U.S. recovery had turned a corner following a recent bout of weakness.
The dollar has weakened in recent weeks after disappointing economic reports prompted investors to delay expectations on the timing of an initial rate hike by the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 95.6, staying above a two-month low of 94.47 set last Thursday.
In the euro zone, data released earlier in the day showed that growth in the manufacturing sector eased slightly in April, but indicated that the economic recovery remains on track.
The final reading of the euro area manufacturing purchasing managers’ index came in at 52.0, revised up from the preliminary reading of 51.9 but below March's 10-month high of 52.2.
A reading below 50.0 indicates activity is declining, while a reading above that level implies it is increasing.
Manufacturing activity continued to be uneven across the euro zone.
Germany’s manufacturing index ticked down to 52.1 from an 11-month high of 52.8 in March, while the French factory sector remained in contraction territory for the 12th straight month.
“The dip in the rate of expansion will serve to check recent optimism that the ECB's quantitative easing program has bought a guaranteed ticket to recovery,” said Markit’s Chief Economist Chris Williamson.
The ECB launched a trillion-euro stimulus program in March and recent economic reports indicated that the recovery in the region was already gaining traction as a result.
The euro was also lower against the yen and the pound, with EUR/JPY down 0.51% to 133.87 and EUR/GBP losing 0.25% to trade at 0.7371.
Trade volumes remained thin on Monday with markets in the UK closed for a holiday.