Forexpros – The euro dipped against the U.S. dollar in choppy trade on Wednesday, following the release of mixed U.S. economic data, as investors remained cautious ahead of monetary policy decisions by the Federal Reserve and the European Central Bank.
EUR/USD hit 1.2281 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.2297, dipping 0.06%.
The pair was likely to find support at 1.2224, the low of July 30 and resistance at 1.2389, the high of July 27.
In the U.S., the Institute for Supply Management said that its manufacturing purchasing managers’ index rose to 49.8 in July from 49.7 in the preceding month, but remained below the 50 level that separates contraction from expansion.
Analysts had expected the ISM manufacturing PMI to come in at 50.2.
The data came after payroll processor ADP said the U.S. private sector added a seasonally adjusted 163,000 jobs in July, beating expectations for an increase of 120,000.
June’s figure was revised down to 172,000, slightly lower that the initial estimate of 176,000.
Trade remained subdued ahead of the Fed policy decision later in the session. The U.S. central bank was expected to stop short of announcing a third round of quantitative easing measures, but to indicate that it remained ready to act to spur economic growth if necessary.
The euro remained supported by lingering optimism that the European Central Bank will unveil major steps to counter the debt crisis in the euro zone at its policy meeting on Thursday.
Expectations have been mounting that the ECB will announce measures to lower Spanish and Italian borrowing costs after the bank’s head Mario Draghi pledged last week to do whatever is necessary to preserve the euro.
The euro was higher against the broadly weaker pound, with EUR/GBP advancing 0.47% to 0.7885.
The pound came under pressure following a report showing that the U.K. manufacturing sector contracted more-than-expected in July.
The Markit/CIPS U.K. manufacturing PMI dropped to 45.4 in July, the lowest level since March 2009, from a downwardly revised 48.4 in June and well below forecasts for a reading of 48.7.
The weak data fuelled expectations for more monetary easing by the Bank of England in the coming months, after data last week showed that the U.K. economy contracted in the three months to June, extending the recession into a third quarter.
Forexpros
