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Forex News: Euro Appreciates As Eurozone Factory Activity Accelerates To

Euro Appreciates As Eurozone Factory Activity Accelerates To Record High

06/01/2021 - 06:47:00 (RTTNews)

(RTTNews) - The euro gained ground against its major counterparts in the European session on Tuesday, as European shares rose after data showed that Eurozone manufacturing sector continued to expand at a faster pace in May to the highest level on record.

Final data from IHS Markit showed that the manufacturing PMI rose to 63.1 in May from 62.9 in April. The flash score was 62.8.

It was also the eleventh successive month that the index has rose above the 50.0 mark.

The data added to hopes that the economic recovery continues to gain momentum.

Eurozone consumer price inflation accelerated for a third straight month and at a faster than expected pace in May, while the jobless rate eased in April, according to a preliminary data by Eurostat.

The flash consumer price inflation climbed to 2.0 percent from 1.6 percent in April. Economists had forecast inflation of 1.9 percent.

The euro advanced to a 5-day high of 0.8627 against the pound, while touching 134.09 against the yen, a level unseen since February 2018. The euro may find resistance around 0.88 against the pound and 137.00 against the yen.

The euro rose to nearly a 2-week high of 1.1003 against the franc from yesterday's close of 1.0985. Against the kiwi, the euro hit a 6-day peak of 1.6853. The euro is seen locating resistance around 1.13 against the franc and 1.70 against the kiwi.

The euro bounced off to 1.2239 against the greenback, not far from a 6-day peak of 1.2241 set at 3:45 am ET. The euro is likely to face resistance around the 1.24 mark.

The European currency reversed from its Asian session's 4-day low of 1.5748 and was worth 1.5814 against the aussie. If the euro rises further, 1.61 is likely seen as its next resistance level.

Survey from the Australian Industry Group showed that Australia's manufacturing sector continued to expand in May, and at a faster pace, with a Performance of Manufacturing Index score of 61.8.

That's up from 61.7 in April and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. This was the highest monthly result for the Australian PMI since March 2018 and a eighth consecutive month of recovery from the severe disruptions of Covid-19 in the second quarter of 2020.

In contrast, the euro edged down to 1.4704 against the loonie, compared to yesterday's close of 1.4740. The next possible support for the currency is seen around the 1.44 level.

Looking ahead, Canada GDP data for the first quarter, U.S. ISM manufacturing PMI for May and construction spending for April are set for release in the New York session.

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