CANBERA (dpa-AFX) - The euro strengthened against other major currencies in the European session on Wednesday, as European stock markets traded higher after having surged to a record high the previous day, driven by positive corporate earnings and hopes for progress in talks between Washington and Tehran to reopen the Strait of Hormuz.
Media reports suggest that Iran is considering allowing European countries to help clear mines from the strategic waterway, marking a significant shift in Tehran's position.
Iranian Foreign Ministry spokesman Esmaeil Baqaei said that talks with Oman on securing safe shipping routes continue 'positively.'
Saudi Arabia reportedly said it intends to contain a renewed conflict with Houthi militants through behind-the-scenes diplomacy.
The euro started rising against its most major currencies after the release of Eurozone PMI reports in the European session.
After hitting a neutral 50.0 in June, the HCOB Eurozone Composite PMI rose to 52.0 in July, indicating a recovery into expansion territory. This represents the fastest growth rate in eight months and the first rise in regional business activity since March. This turnaround was fueled by the Eurozone Services PMI, which increased from 49.4 in June to 51.7 in July, ending a three-month downward trend with its strongest growth rate since February.
In other economic news, data from Eurostat showed that the Eurozone producer prices declined for the first time in four months in June due to the fall in energy prices. Producer prices dropped 0.3 percent on a monthly basis in June, in contrast to the 0.2 percent increase in May. This was the first drop since February. Prices were forecast to fall 0.2 percent.
Excluding energy, producer prices were up 0.2 percent but slower than May's 0.7 percent increase.
On a yearly basis, producer price inflation eased to a three-month low of 4.6 percent, as expected, from 5.9 percent in May.
In the European trading today, the euro rose to 2-day highs pf 1.1547 against the U.S. dollar, 182.17 against the yen and 0.9343 against the Swiss franc, from early lows of 1.1527, 181.54 and 0.9318, respectively. If the euro extends its uptrend, it is likely to find resistance around 1.16 against the greenback, 188.00 against the yen and 0.94 against the franc.
Against the pound, the euro edged up to 0.8576 from an early low of 0.8567. The euro is likely to find resistance around the 0.87 region.
Moving away from an early 2-day low of 1.6354 against the Australian dollar, the euro edged up to 1.6385. On the upside, 1.65 is seen as the next resistance level for the euro.
Against the New Zealand and the Canadian dollars, the euro advanced to 2-day high of 1.9686 and a 1-month high of 1.6248 from early lows of 1.9613 and 1.6218, respectively. The next possible upside target for the euro is seen around 2.00 against the kiwi and 1.63 against the loonie.
Looking ahead, U.S. MBA mortgage approvals data, U.S. ADP weekly employment data, U.S. ISM services PMI for July and U.S. EIA crude oil data are set to be released in the New York session.
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