EUR/USD on six-week highs

The euro soared to six-week highs against the US dollar on trading Wednesday, following the release of an official report, which showed Manufacturing PMI in the Euro zone expanded during July.

EUR/USD hit a session high at 1.3253 at 7:38 GMT, the highest point since June 20th, after which consolidation followed at 1.3240. Support was expected to be found at July 22nd low, 1.3133, while resistance was to be encountered at June 20th high, 1.3300.

Advance Manufacturing Purchasing Managers Index in the single currency zone rose to a reading of 50.1 during July, exceeding expectations that the index would remain below the 50.0 level, at 49.1, after in June this indicator showed a value of 48.8. Advance Services PMI in the Euro zone also showed a certain improvement in July, but remained still in the zone of contraction at 49.6, after a reading of 48.3 during the preceding month. Experts had projected that activity in the sector of services would increase to 48.7.

In addition, German manufacturing sector expanded unexpectedly in July, while the rate of increase was larger. Manufacturing PMI rose to 50.3 in July from 48.6 in June. Preliminary estimates pointed that this index will remain in the contraction zone, at 49.2. Advance Services PMI in Germany rose to 52.5 during July, significantly above the forecast of a value of 50.7. These indicators implied that private sector in the country showed expansion and economic recovery was gaining momentum.

“The PMIs were a little bit stronger than anticipated,” said Steve Barrow, the head of Group-of-10 research at Standard Bank Plc in London, cited by Bloomberg. “If you look at how euro-region data has progressed recently we’ve tended to see more upside surprises. There’s a relative improvement in the perception of euro-zone data, which is helping the euro.”, he also added.

Meanwhile, demand for the US dollar continued to be supported after official report showed that Chinese manufacturing activity dropped to an 11-month low during July. HSBC Holdings Plc and Markit Economics reported that the preliminary value of the Purchasing Managers’ Index in Chinese sector of manufacturing decreased at a faster than expected rate to 47.7 in July, after showing a value of 48.2 a month ago. Experts had projected an increase to 48.6.

Elsewhere, the euro traded higher against the British pound, as EUR/GBP cross added 0.14% to 0.8617 at 8:58 GMT. Ultimately, EUR/JPY pair registered a considerable climb, by 0.81% to 132.57 at 9:01 GMT.