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Forex - EUR/USD gains despite solid U.S. housing data

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Shutterstock photo - The euro moved higher against the dollar on Wednesday even though the greenback strengthened against other currencies when data revealed new U.S. home sales hit a five-year high in June.

Better-than-expected factory data out of Europe gave the single currency support.

In U.S. trading on Wednesday, EUR/USD was up 0.05% at 1.3230, up from a session low of 1.3191 and off from a high of 1.3256.

The pair was likely to find support at 1.3068, the low from July 18, and resistance at 1.3416, the high from June 19.

The Commerce Department reported earlier U.S. new home sales jumped 8.3% to 497,000 units, their highest level since May 2008.

Analysts were expecting new home sales to rise 1.8% to 482,000, which bolstered the dollar.

Better-than-expected economic indicators in the U.S. strengthen the currency by fanning expectations that the Federal Reserve will move closer to tapering and eventually ending monetary stimulus measures such as asset purchases that weaken the greenback to spur recovery.

Fed Chairman Ben Bernanke said last week that the pace of the bank's bond purchases would depend on economic data.

The euro, however, flexed its own muscles against the dollar earlier after U.K.-based Markit Economics revealed that the euro zone purchasing managers' index rose to 50.1 in July from 48.8 in June, beating analysts' calls for a 49.1 reading.

A reading above 50 signals expansion.

Germany's manufacturing PMI rose to 50.3 from June's reading of 48.6, and the service-sector PMI jumped to 52.5, from 50.4.

The French manufacturing PMI rose to a 17-month high of 49.8 from 48.4 in June, while France's services PMI improved to 48.3 from 47.2 last month.

Both French and German data beat market expectations, and indicators in both the U.S. and Europe gave investors room to look past soft factory figures in China.

The preliminary reading of China's HSBC manufacturing PMI fell to 47.7 in July from a final reading of 48.2 last month. Analysts had expected the index to rise to 48.6. A reading below 50 indicates a contraction.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.11% at 0.8612 and EUR/JPY trading up 0.82% at 132.60.

On Thursday in the euro zone, Spain is to release official data on the unemployment rate. The Ifo Institute is to publish its index of German business climate.

The U.S. is to publish government data on durable goods orders as well as the weekly government report on initial jobless claims. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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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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