Investing.com - The euro firmed against the dollar on Tuesday after softer-than-expected U.S. factory orders gave investors excuse to sell the greenback for profits.
The U.S. currency has posted strong gains in recent sessions as U.S. monetary policy has grown less accommodative while Europe and Japan have headed in the opposite direction.
In U.S. trading, EUR/USD was up 0.65% at 1.2566, up from a session low of 1.2481 and off a high of 1.2571.
The pair was likely to find support at 1.2441, Monday's low, and resistance at 1.2772, last Wednesday's high.
U.S. factory orders fell for a second consecutive month in September, dampening optimism over the strength of U.S. recovery, official data revealed earlier.
The U.S. Census Bureau reported earlier that factory orders declined by 0.6% in September, in line with market expectations though still a decline nonetheless.
The August figure was revised to a 10% contraction from an initial 10.1% decline.
The numbers gave investors room to sell the greenback for profits, wiping out gains stemming from divergent monetary policies coupled with upbeat U.S. manufacturing, consumer sentiment and economic growth reports.
Elsewhere in the U.S., the Bureau of Economic Analysis said the country's trade deficit widened to $43.03 billion in September from $39.99 billion in August, whose figure was revised from a previously reported deficit of $40.1 billion.
Analysts had expected the U.S. trade gap to widen to $40.0 billion in September.
The single currency held well into positive territory despite downward revisions made to the continent's growth forecasts.
The European Commission cut its forecast for euro zone economic growth to 0.8% this year from a 1.2% forecast made in the spring, while the 2015 growth forecast dipped to 1.1% from 1.7%.
The commission added it expects euro area inflation to remain below the European Central Bank's target of close to but just below 2% until after 2016 at the earliest and warned that unemployment levels will remain at their current high levels for longer than previously expected.
Elsewhere, the euro was up against the pound, with EUR/GBP up 0.38% at 0.7846, and up against the yen, with EUR/JPY up 0.08% at 142.41.
On Wednesday, expect the dollar to move on U.S. service-sector data.