Euro Advances As Eurozone PMI Hits 35-month High

Frankfurt (Apr 23)   The euro gained ground against most major currencies in European deals on Wednesday, as business activity across the euro area accelerated at its fastest pace in almost three years in April.

The survey data from Markit Economics showed that the composite output index rose unexpectedly to 54.0 in April from 53.1 in March. The latest reading was the highest since May 2011 . Economists had forecast the score to fall marginally to 53.

The PMI has now been above the 50.0 no-change level for ten consecutive months, signaling a continuous expansion of business activity since last July.

Germany's private sector growth improved at a solid pace at the start of the second quarter, separate data showed today.

The composite output index rose to 56.3 in April from 54.3 in March. The latest reading was the second-highest in nearly three years and stretched the current period of growth to 12 months.

The euro resumed early gains against the US dollar, reaching a 6-day high of 1.3848. This marks a 0.3% increase from yesterday's closing quote of 1.3804. The next possible upside target for the euro lies around the 1.39 zone.

The euro appreciated to 0.8241 against the pound, a level unseen since April 17 , and was up by 0.5% from Tuesday's closing value of 0.8202. On the upside, 0.83 is likely seen as the euro's next resistance level.

The euro reversed from an early low of 141.45 against the yen and rose back to 141.98. The euro is thus heading to pierce its early near 3-week high. The next possible resistance for the euro lies around the 143.00 region.

Bank of Japan Governor Haruhiko Kuroda said inflation may exceed the official estimate in the fiscal year ended March.

Consumer price inflation was slightly higher in fiscal 2013 that the central bank's projection of 0.7%, he told a parliamentary session today.

The euro rallied to 1.5292 against the loonie, its strongest since March 27 . Continuation of uptrend may lead the euro to a resistance at the 1.537 zone.

The euro strengthened to a 2-day high of 1.6120 against the kiwi and near a 3-week high of 1.4925 against the aussie, reversing from early multi-day lows of 1.6008 and 1.4715,respectively. The euro is likely to find resistance around 1.63 against the kiwi and 1.51 against the aussie.

Looking ahead, Canada retail sales data for February, US flash manufacturing PMI for April and new home sales for March are set for release in the New York session.