Euro Rises On ECB Stimulus Tapering Fears

The euro strengthened against its major counterparts in the early European session on Tuesday, as the European Central Bank's QE reduction to 30 billion euros a month took effect and comments from ECB board member Benoit Coeure sparked fears over the withdrawal of stimulus.

There was a strong chance that the bank's 2.55 trillion euros asset purchase programme would not be extended again when it expires in September, Cœuré told in an interview with Caixin Global, which was conducted on December 17 and published over the weekend.

Should inflation turned out to be higher than currently expected, the bank is ready to respond with several instruments, he told.

Final data from IHS Markit showed that Eurozone manufacturing sector activity grew the most since the survey began in mid-1997.

The factory Purchasing Managers' Index improved to 60.6 in December, in line with flash estimate, from 60.1 in November.

This was the highest score since mid-1997 and identical to the flash estimate published on December 14.

The currency has been trading in a positive territory against its major rivals in the Asian session, with the exception of the pound.

The 19-nation currency climbed to 0.8918 against the pound, its strongest since November 28, 2017. If the euro extends rise, 0.91 is likely seen as its next resistance level.

Data from IHS Markit showed that the U.K. manufacturing activity growth eased more than expected in December.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell to 56.3 from November's 51-month high of 58.2.

The common currency firmed to near a 4-month high of 1.2078 against the greenback, compared to 1.2005 hit late New York Friday. The euro is likely to challenge resistance around the 1.23 region.

The euro that ended Friday's trading at 1.1685 against the franc advanced to a 5-day high of 1.1728. The euro is seen finding resistance around the 1.20 mark.

The single currency strengthened to near a 2-week high of 1.6961 against the kiwi, 11-day highs of 1.5411 against the aussie and 1.5141 against the loonie, from its early 4-day lows of 1.6868 and 1.5323 and an early low of 1.5056, respectively. Continuation of the euro's uptrend may see it challenging resistance around 1.72 against the kiwi, 1.56 against the aussie and 1.53 against the loonie.

The euro hit more than a 2-year high of 135.63 against the Japanese yen, from an early 4-day low of 135.15 and held steady thereafter. The pair ended last week's deals at 135.16.

Looking ahead, Markit's U.S. final manufacturing PMI for December is set for release in the New York session.

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