Investing.com - The euro gained ground against the dollar on Thursday after data showed that France’s private sector strengthened this month, but gains were held in check as business activity in the wider euro area eased for the second month in a row.
EUR/USD initially hit highs of 1.1173 before pulling back to 1.1143, up from Wednesday’s two-week lows of 1.1061.
The euro moved higher after data showed that the preliminary reading of the French composite purchasing managers' index rose to 51.0 up from 50.6 in April, moving further above the 50 level which separates expansion and contraction.
The French services PMI rose to 51.6 from 51.4 and the manufacturing PMI rose to a 12-month high of 49.3 from 48.0 in April.
But activity in Germany, the euro area’s largest economy slowed to a five month low, adding to concerns that economic growth is losing momentum.
The German composite PMI slid to 52.8, down from 54.1 in April.
The preliminary euro zone composite PMI slid to a three month low of 53.4, down from 53.9 in April.
The data indicated that the recovery in the euro zone slowed slightly for a second successive month as activity in the region’s periphery outpaced growth in the core economies.
The euro remained on the defensive after falling sharply in the previous three sessions amid renewed concerns over the prospects of a Greek default.
On Wednesday a Greek government official warned that Athens will be unable to make a €305 million payment to the International Monetary Fund due on June 5 if a cash-for-reforms deal with its international lenders is not reached by then.
The euro was also higher against the yen, with EUR/JPY up 0.25% to 134.94, but was lower against the pound, with EUR/GBP down 0.24% to 0.7122.
Sterling received a boost after data showing that U.K. retail sales jumped 1.2% last month, far more than forecasts for an increase of 0.4%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.48% to 95.20.
Investors were turning their attention to Friday’s U.S. inflation data and a speech by Federal Reserve Chair Janet Yellen for fresh indications on how the economy is performing.
Wednesday’s minutes of the Fed’s April meeting did little to alter expectations that it will hold off on raising rates until later this year, with most officials believing that a June rate hike would be premature.