Investing.com - The dollar strengthened against the euro and most other currencies on Monday after a widely-watched factory barometer beat consensus forecasts and fanned sentiments that the Federal Reserve remains on track to begin tapering stimulus programs in the coming months.
Stimulus tools such as the Fed's USD85 billion in monthly bond purchases aim to drive recovery by pushing down long-term interest rates, weakening the dollar in the process, though talk of their dismantling strengthens the currency.
In U.S. trading on Monday, EUR/USD was down 0.31% at 1.3549, up from a session low of 1.3526 and off from a high of 1.3622.
The pair was likely to find support at 1.3490, the low from Nov. 25, and resistance at 1.3818, the high from Oct. 28.
The dollar saw support earlier after the Institute for Supply Management reported that U.S. manufacturing activity in November expanded at its fastest pace since April 2011, fueling optimism for more robust economic recovery down the road.
The ISM manufacturing purchasing managers' index rose to 57.3 in November from 56.4 in October.
Analysts were expecting the index to fall to 55.0, and the surprise uptick sparked demand for the dollar.
The report said both production and new orders rose by around 3 points to 62.8 and 63.6, respectively, while the employment component of the index indicated some improvement in the labor market in November, rising by a little over 3 points to 56.5.
Meanwhile across the Atlantic, a similar indicator beat expectations as well.
London-based Markit Economics reported that the euro zone's manufacturing PMI rose to a two-year high of 51.6 in November from October's 51.5 reading, beating estimates for an unchanged figure.
Germany's PMI came in at 52.7 compared to market expectations for an unchanged read of 52.5.
However, Spain's manufacturing sector contracted for the first time since July last month, while the French manufacturing sector contracted for the 21st straight month, which sent investors favoring the greenback over the single currency.
The single currency was down against the pound and up against the yen, with EUR/GBP trading down 0.25% at 0.8280 and EUR/JPY trading up 0.34% at 139.68.
The yen came under pressure on market expectations for the Bank of Japan to step up stimulus measures to meet its 2% inflation target by 2015.
Earlier Monday, BoJ Governor Haruhiko Kuroda pledged to counter any new downside risks to the bank's inflation goal, saying the BoJ would act by "adjusting monetary policy without hesitation."
On Tuesday in the euro zone, Spain is to publish data on the change in the number of unemployed people.
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