Forex - EUR/USD lower on agreement worries despite weak U.S. data

Investing.com - The euro traded lower against the U.S. dollar Monday, despite a report indicating manufacturing activity in the U.S. contracted for the first time since July 2009 in June as fears the euro zone agreement is not adequate pressured the single currency.

EUR/USD hit 1.2582 during U.S. afternoon trade, near the low of the session, after striking a high of 1.2676 earlier.

The pair was likely to find support at 1.2518, the low of June 22 and resistance at 1.2692, Friday’s high and a six-day high.

In the U.S., the Institute for Supply Management reported its manufacturing purchasing managers’ index fell to 49.7 in June, down from 53.5 in May. Analysts had expected the index to tick down to 52.0. 

New orders tumbled to 47.8 from 60.1, while the employment gauge fell to 56.6 from 56.9.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

The euro came under broad selling pressure earlier in the day amid concerns over the effectiveness of a new European agreement to tackle the debt crisis in the euro zone after Finland and the Netherland’s reiterated their opposition to using euro zone bailout funds to purchase government bonds.

On Friday, European leaders agreed to use the euro zone’s bailout funds to support struggling banks directly, without adding to national debt, and to purchase government debt in order to keep borrowing costs down.

Leaders also agreed to set up a joint banking supervisory body for the euro area.

The euro was weaker against the pound and the yen, with EUR/GBP down 0.51% to trade at 0.8020 and EUR/JPY tumbling 0.96% to 100.06.

Adding additional pressure to the euro,  official data indicated that the unemployment rate in the euro zone rose to a record high 11.1% in May, up from 11.0% in April.

Another economic report indicated that the final reading of the euro zone manufacturing PMI came in at 45.1 in June, above the preliminary estimate of 44.8 and holding steady at its lowest level since June 2009.