EUR given boost as Italy leads the way with consensus-beating Manufacturing PMI reading

The euro dollar exchange rate is 0.22 pct higher at 1.3026.
The euro pound exchange rate is 0.24 pct lower at 0.8532. (Note, the UK's PMI reading was well ahead of expectations).
The euro Australian dollar exchange rate is 0.45 pct lower at 1.3519.

Please Note: The above quotes are taken from the spot markets; your bank will however affix its own discretionary spread to these figures. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please find out more here.

Driving euro strength today was news that Italy’s manufacturing PMI posted a significant improvement in May, rising to 47.3 vs. 45.5 in April.

Although remaining well below the 50 threshold, the index came in much better than expected.

"Today’s strong reading is definitely good news because it is the second significant increase in a row and comes after an improvement in the ISTAT business confidence in May (88.5 vs. 87.9 in April). On top of this, the strong pick up in the new orders component is also good news. In line with our expectations, the export orders component continued to outperform and stands now well above the expansion threshold, suggesting that the expected improvement in exports prospects is about to materialise," says Loredana Federico at UniCredit Bank.

Italy has merely lead the way for a decent morning of expectation-beating results.

Markit's Eurozone Manufacturing Purchasing Managers' Index rose to 48.3 in May from April's 46.7, coming in ahead of an earlier flash reading of 47.8 but spending its 22nd month below the 50 level that divides growth from contraction.

That reading is the highest since February 2012 and is the first time the downturn has eased in four months. An output gauge, which feeds into the wider composite PMI due on Wednesday, bounced to a 15-month high of 48.8 from 46.5.

Euro dollar exchange rate forecast for today

Despite the positive action on the fundamental front, the technical outlook for the euro dollar exchange rate remains mixed.

Joshua Mahony gives his verdict for the euro today:

"A mixed picture for the eurodollar today, where substantial gains were partially undone on Friday, painting a more indecisive scene ahead of trading throughout Monday.

"However, today’s price action could quite clearly have a significant role to play as the whether the pair look destined to continue in this current period of consolidation and sideways price action or whether we are looking to retest the recent lows towards the latter stages of the week.

"The daily chart points to a clear descending triangle formation which nears completion and thus I expect this upper descending trend-line to be respected as this also coincides with the 200 day moving average.

"This coupled with the stochastic and CCI indicators (both showing market to be overbought) point towards a move lower in the coming period with the ascending trend-line (1.279) and Fibonacci retracement (1.2726) providing key targets. That being said, if the price action can break and close above 1.306 today we would be looking at a much more bullish picture for the pair."