Investing.com - The euro rose to session highs against the dollar on Monday after data showed that U.S. factory activity slowed in January, clouding the outlook for the economic recovery.
EUR/USD hit session highs of 1.3568 and was last up 0.19% to 1.3514, recovering from ten-week lows of 1.3478.
The pair was likely to find support at 1.3440 and resistance at 1.3570.
The dollar weakened after the Institute for Supply Management said its manufacturing index fell to a seven-month low in January, as new orders slumped.
The ISM’s manufacturing purchasing managers’ index came in at 51.3 for January, down sharply from a reading of 57.0 in December. Analysts had expected the index to tick down to 56.4.
The report said new order growth fell at the fastest rate in 33 years, with the new orders index slumping to 51.2 from 64.4 in December. The employment index fell from 55.8 in December to 52.3, the weakest since June.
Earlier Monday a report showed that the Markit U.S. manufacturing PMI came in at a three-month low of 53.7 for January, down from December's 55.0.
In the euro zone, data on Monday showed that the bloc’s manufacturing sector continued to recover in January.
The euro zone’s manufacturing PMI rose to a 32-month high of 54.0 in January, up from 52.7 in December and a shade higher than the preliminary estimate of 53.9.
Germany saw strong growth, with its manufacturing PMI rising to a 32-month high of 56.5, up from the preliminary estimate of 56.3. However, France continued to lag with its manufacturing PMI rising to a four-month high of 49.3, remaining below the 50 level that separates contraction from expansion.
All of the euro zone’s peripheral countries reported an increase in manufacturing activity in January, with Greece returning to growth for the first time since August 2009.
Elsewhere, the dollar fell to more than two-month lows against the yen. USD/JPY hit 101.23, the weakest since November 27 and was last down 0.66% to 101.34.
Demand for the safe haven yen continued to be underpinned by fears over a crisis in emerging markets and concerns over a possible slowdown in China. Emerging markets have been hard hit in recent sessions by concerns over the impact of reductions in Federal Reserve stimulus and fears over slowing growth China.