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Forex - EUR/USD drops on strong U.S. data, dovish Draghi comments

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Shutterstock photo - The euro dropped against the dollar on Thursday after factory and jobs data in the U.S. surpassed expectations, while comments from European Central Bank President Mario Draghi suggesting policy will remain loose softened the single currency.

In U.S. trading on Thursday, EUR/USD was down 0.54% at 1.3231, up from a session low of 1.3194 and off from a high of 1.3311.

The pair was likely to find support at 1.3166, the low from July 25, and resistance at 1.3345, Wednesday's high.

In the U.S. earlier, the Institute of Supply Management said its widely-watched purchasing managers index rose to 55.4 in July from 50.9 in June, expanding at its fastest rate since April 2011 and well above market forecasts for a 52.0 reading.

The numbers strengthened the greenback by keeping expectations alive that the Federal Reserve remains on track to winding down stimulus measures such as its USD85 billion-a-month bond-buying program, which weakens the greenback to speed up recovery.

Better-than-expected data out of the labor market also fueled ongoing sentiments that special monetary stimulus programs will begin to wind down possibly this year and end in 2014.

The Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 26 fell by 19,000 to 326,000.

Analysts were expecting jobless claims to come in at 345,000.

Meanwhile, the euro came under pressure after ECB President Mario Draghi said that the central bank's monetary policy will remain accommodative "for an extended period of time."

The ECB held its benchmark interest rate at a record low 0.50% in August, in line with expectations.

Elsewhere in Europe, London-based Markit said the euro zone's manufacturing PMI rose to 50.3 in July, from a reading of 50.1 the previous month. Analysts had expected the index to remain unchanged last month.

The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.20% at 0.8728 and EUR/JPY trading up 0.80% at 131.28.

The Bank of England earlier left interest rates unchanged at a record low 0.5% and left the size of its asset-purchasing program unchanged at GBP375 billion. - offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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