Forex - EUR/USD dips as investors chase U.S. stocks on solid data

A A A - The euro traded largely lower against the U.S. dollar on Tuesday as investors avoided the single currency due to Italian political concerns and went long on stocks in wake of surprisingly strong U.S. service-sector data.

The U.S. Dow Jones Industrial Average touched a record high in earlier intraday trading.

In U.S. trading on Tuesday, EUR/USD was down 0.07% at 1.3017, up from a session low of 1.3011 and off from a high of 1.3076.

The pair was likely to find support at 1.2982, Monday's low, and resistance at 1.3162, Thursday's high.

In the U.S. earlier, the Institute for Supply Management said its February non-manufacturing purchasing managers' index rose to 56.0 from 55.2 in January, beating analysts' calls for the index to fall to 55.0 last month.

The news sparked a rally in U.S. stock markets, which saw record highs earlier.

Elsewhere in Europe, Germany's services PMI rose to 54.7 in February, beating market calls for a 54.1 reading, according to Markit Economics.

A eurozone services PMI hit 47.9 compared with consensus forecasts for a 47.3 reading.

Elsewhere, official data released earlier revealed that eurozone retail sales rose by 1.2% in January, well above expectations for a 0.2% gain.

U.S. and European equities proved to be the asset class of choice during Tuesday's risk-on trading session.

Italy may go to the polls anew following inconclusive results in recent elections, and fears continued to build on Tuesday that electoral uncertainties may prevent the country from pushing through economic reforms, which tarnished the single currency's appeal.

Talk of a possible rate cut by the European Central Bank in the coming months weakened the currency as well.

The euro, meanwhile, was flat to lower against the pound and down against the yen, with EUR/GBP trading down 0.03% at 0.8616, and EUR/JPY trading down 0.07% at 121.67.

On Wednesday, the eurozone is to release revised data on its fourth quarter gross domestic product rates.

The U.S. is to publish data on ADP nonfarm payrolls, a precursor to official data on nonfarm payrolls to be released on Friday. The U.S. is also to release official data on factory orders and crude oil stockpiles.

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This article appears in: Investing , Forex and Currencies

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