On Tuesday the euro rose to session highs against the dollar after data showed output in the euro zone private sector grew at the slowest rate so far this year in September. The euro zone composite output index dipped to 9-month lows of 52.3 from 52.5 in August, adding to fears over the outlook for the recovery in the region.
EUR/USD was up 0.18% to 1.2871, off session lows of 1.2816.
The pair was likely to find support at 1.2815, Monday’s low and a 14 month trough and resistance at around 1.29.
Research group Markit reported that the euro zone composite output index, which measures the combined output of both the manufacturing and service sectors slumped to a nine month low of 52.3 from 52.5 in August.
The bloc’s services PMI slid to a three month low of 52.8 from 53.1 last month, while the manufacturing index ticked down to a 14 month low of 50.5 from 50.7 in August.
Germany’s private sector output continued to expand this month but growth in the manufacturing sector slowed to a 15 month low.
Private sector activity in France fell for the fifth consecutive month, as service sector activity declined for the first time in three months, offsetting a slower decline in manufacturing output.
“The survey paints a picture of ongoing malaise in the euro zone economy,” Chris Williamson, chief economist at Markit said.
The data signaled that the euro area economy is on track to grow by 0.3% in the third quarter, and also indicated the growth could slow further later on in the fourth quarter.
The weak data incentivised expectations for additional stimulus measures from the European Central Bank to help shore up the recovery in the region. Speaking on Monday, ECB President Mario Draghi repeated that the bank was prepared to ease monetary policy further should it become necessary to address the risks of a prolonged period of low inflation in the euro area.
In remarks to the economic and monetary affairs committee of the European parliament, Draghi acknowledged that economic activity in the euro area has slowed and there’s a risk of a further downturn.
Elsewhere, the European currency slightly dipped against the yen, with EUR/JPY slipping 0.13% to 139.64.
