Investing.com - The dollar traded mixed to lower against most major currencies on Tuesday, trimming losses as markets digested a softer-than-expected factory report and determined the data depicted a U.S. economy that remains on the road to recovery.
In U.S. trading on Tuesday, EUR/USD was up 0.17% at 1.3795.
The Institute for Supply Management reported earlier that its manufacturing purchasing managers' index rose to 53.7 in March from 53.2 in February, missing market expectations for a 54.0 reading.
The report showed that employment growth slowed, with the employment index falling to 51.1 from 52.3, the lowest level since June 2013.
The numbers weakened the dollar earlier, as investors avoided the greenback ahead of Friday's March jobs report, which many feel may depict and improving albeit sluggish U.S. economy, one still in need of Federal Reserve stimulus support.
The Fed is currently purchasing $55 billion in bonds a month to spur recovery, a monetary policy tool known as quantitative easing that suppresses interest rates to prop up the economy, weakening the dollar as a side effect.
Upon digesting the data, however, investors viewed the PMI numbers as positive overall, as March marked the second month of gains for the indicator, which kept expectations firm that stimulus programs that have weakened the dollar for years are on their way out.
The single currency, meanwhile, rose after Markit Economics reported that the euro zone's purchasing managers' index came in at 50.3 in March, unchanged from February and in line with expectations.
However, average input costs declined for the second straight month and output prices also dipped, adding to pressure on the European Central Bank to implement fresh policy measures to stave off the threat of deflation in the region.
Still, separate data revealed that the euro zone's unemployment rate came in at 11.9% in February, lower than expectations for a 12.0% reading, which edged the single currency over the greenback.
The dollar was up against the yen, with USD/JPY up 0.45% at 103.69, and down against the Swiss franc, with USD/CHF down 0.14% at 0.8834.
The yen slid for another day on expectations that China will implement fresh stimulus measures to shore up slowing growth, which dampened safe-haven demand for the Japanese currency.
The greenback was up against the pound, with GBP/USD down 0.18% at 1.6632.
The pound took a hit against the dollar earlier after data showed that the pace of the recovery in the U.K. manufacturing sector slowed unexpectedly in March.
The Markit U.K. manufacturing purchasing managers’ index fell to an eight-month low of 55.3 last month from a downwardly revised 56.2 in February. Analysts had expected the manufacturing index to tick up to 56.7.
While short of expectations, the index came in over 50, which signifies expansion, and the sector continues to drive job creation, which cushioned losses.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.11% at 1.1038, AUD/USD down 0.25% at 0.9241 and NZD/USD down 0.33% at 0.8646.
The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.01% at 80.25.
On Wednesday, the U.S. is to release the ADP report on private-sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to release data on factory orders.