Investing.com - The euro remained higher against the dollar on Monday after reports showing that activity in the U.S. manufacturing sector slowed slightly last month, but still comfortably outstripped the euro zone.
EUR/USD touched highs of 1.2507 and was last up 0.27% to 1.2485.
Research group Markit reported that U.S. manufacturing activity expanded at the slowest pace since January last month as new export orders fell, but continued to show steady growth.
The Markit manufacturing purchasing managers’ index ticked down to 54.8 from 55.9 in October. Economists had forecast a decline to 55.0.
Another report by the Institute of Supply Management showed that its manufacturing PMI dipped to 58.7 from 59.0 in October, but was still ahead of expectations of 57.9.
Data released earlier on Monday showed that factory activity in the euro zone slowed to a near standstill last month.
The euro zone’s manufacturing PMI slowed to 50.1 from a preliminary reading of 50.4 last month, just barely above the 50 level separating growth from contraction.
Germany’s manufacturing PMI entered contraction territory for the first time in 17 months, falling to 49.5, as new orders fell at the fastest rate in nearly two years.
The French manufacturing PMI remained in contraction territory at 48.4, while Italy’s factory PMI came in at 49.0.
The reports came after data on Friday showed that the annual rate of euro area inflation slowed to a five year low of 0.3% in November, down from 0.4% in October.
The weak data added to pressure on the European Central Bank to step up measures to spur growth and stave off the threat of deflation ahead of its upcoming policy meeting on Thursday.
The single currency edged lower against the yen, with EUR/JPY at 147.56, off overnight lows of 147.11.
Elsewhere, the yen fell to fresh seven year lows against the dollar on Monday before recovering some ground after ratings agency Moody’s downgraded Japan's sovereign debt rating by one notch to A1.
USD/JPY hit highs of 119.14, the most since August 2007, before falling back to 118.10, down 0.41% for the day.
The ratings agency cited “heightened uncertainty” over Japan’s ability to cut its fiscal deficit following a decision by Prime Minister Shinzo Abe to delay a planned sales tax hike.
"Fiscal consolidation will become increasingly difficult to achieve as time passes given rising government spending, particularly for social programs associated with a rapidly ageing population," Moody's said.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.53% to 87.94.