Forexpros – The euro gained slightly against the U.S. dollar Monday, as stronger than expected U.S. ISM data, improved euro zone sales figures and China cutting growth forecasts gave mixed messages to the currency market.
EUR/USD pulled back from 1.3240, the session high, to hit 1.3221 during U.S. afternoon trade, up 0.17%.
The pair was likely to find support at 1.3043, the low of February 15 and resistance at 1.3331, last Friday’s high.
In the U.S., the Institute for Supply Management said its non-manufacturing purchasing managers’ index climbed to 57.3 in February from a reading of 56.8 the previous month. Analysts had expected the index to decline to 56.1.
A separate report showed that U.S. factory orders fell, albeit at a slower than forecast pace in January, declining by a seasonally adjusted 1.0%, compared to expectations for a 1.3% slide.
The euro found support earlier after official data showed that retail sales across the euro zone rose for the first time in five months in January, increasing by a seasonally adjusted 0.3%, defying expectations for a 0.1% decline.
The positive data offset a report showing that the euro zone’s services sector contracted at faster rate than initially estimated in February, shrinking for the fifth time in six months.
Meanwhile, China reduced its growth target to 7.5% in 2012, marking the lowest number since 2004.
This reduction stroked fears of lessening demand for European goods and services in the world’s second largest economy.
China will also aim for inflation to remain steady at 4%, unchanged from its 2011 goal.
Weighing on the single currency, a euro zone composite index of purchasing managers dropped from 50.4 in January to 49.3 in February, missing the initial figure of 49.7 published on February 22.
A reading less than 50 in the composite index signals economic contraction.
In Greek news, investors are awaiting to determine how many private investors agree to write down their sovereign debt holdings by the March 8 deadline.
Greece has set a 75% participation rate as the limit for proceeding with the transaction.
Private investors are urged to forgive Greece 53.5% of their principal and swap their remaining holdings for new Greek bonds and notes from the European Financial Stability Facility.
This is causing much trepidation as Germany’s DSW investor protection group has advised private creditors to reject the offer.
The euro was lower against the pound and the yen, with EUR/GBP easing lower 0.1% to hit 0.8338 and EUR/JPY off 0.36% to hit 107.59.
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