Forex - Euro higher against dollar

The euro was higher against the dollar on Monday ahead of the release of U.S. manufacturing data as speculation over when the Federal Reserve may begin to taper its asset purchase program continued.

EUR/USD hit 1.3060 during European afternoon trade, the session high; the pair subsequently consolidated at 1.3041, rising 0.24%.

The pair was likely to find support at 1.2983, the low of June 26 and resistance at 1.3086, the high of June 26.

Earlier Monday, data indicated that the slump in the euro zone’s manufacturing sector is easing.

Spain’s manufacturing purchasing managers’ index rose to 50.0 in June, the highest level in two years, up from 48.1 in May.

France’s manufacturing PMI improved to 48.4 from 46.4 in May, but Germany’s manufacturing PMI fell to 48.6, from May's reading of 49.4.

Meanwhile, official data showed that the euro zone unemployment rate ticked up to 12.1% in May from 12% in April, compared to expectations for a reading of 12.3%.

Another report showed that consumer price inflation in the euro zone rose 1.6% in June from 1.4% in May, in line with expectations.

Investors were looking ahead to the Institute of Supply Management’s report on U.S. manufacturing activity later in the trading day amid expectations that the Fed will soon start tapering its USD85 billion-a-month bond buying program. 

Investors were also awaiting Friday’s U.S. nonfarm payrolls data, for further clues on when the U.S. central bank may decide to unwind its stimulus program.

The euro was higher against the pound and the yen, with EUR/GBP up 0.15% to 0.8566 and EUR/JPY advancing 0.73% to 129.93.

In the U.K., data on Monday showed that manufacturing activity expanded at the fastest pace in more than two years in June.

The U.K. manufacturing PMI rose to a seasonally adjusted 52.5 in June from an upwardly revised reading of 51.5 in May.

Analysts had expected the manufacturing PMI to hold steady at 51.5 last month.