2021.01.2210:16:00UTC+00Euro Advances After Better-than-expected German PMI Data

The euro drifted higher against its major counterparts in the European session on Friday, as a data showed that German PMI beat forecasts in January, signaling a recovery in economic activity from the Covid-19 crisis.

Flash survey results from IHS Markit showed that German services Purchasing Managers' Index came in at 46.8, versus expectations of 45.3.

The flash composite output index fell to 50.8 in January from 52.0 in December. However, the reading was above the economists' forecast of 50.3.

The manufacturing PMI dropped to a 4-month low of 57.0 from 58.3 in December, but was above the forecast of 57.5.

The dollar has been falling over the last few weeks, lifting the euro.

Hopes of increased stimulus under the Biden's administration have prompted investors to dump the safe-haven greenback.

The euro appreciated to an 8-day high of 126.33 against the yen and a 9-day high of 1.2190 against the greenback, compared to Thursday's closing values of 125.88 and 1.2162, respectively. The euro is likely to challenge resistance around 127.5 against the yen and 1.24 against the greenback.

The euro spiked up to a 3-day high of 1.5464 against the loonie, 2-day high of 1.6957 versus the kiwi and a 10-day high of 1.5779 against the aussie, up from yesterday's closing values of 1.5363, 1.6841 and 1.5653, respectively. The next possible resistance for the euro is seen around 1.56 against the loonie, 1.74 versus the kiwi and 1.62 against the aussie.

The euro rose to a 3-day high of 0.8916 against the pound from Thursday's close of 0.8858. The euro is seen facing resistance around the 0.92 mark.

Data from the Office for National Statistics showed that UK retail sales recovered in December but the pace of growth was much slower than expected.

The retail sales volume gained 0.3 percent month-on-month, reversing a 4.1 percent decline seen in November. However, the pace of growth was weaker than the economists forecast of +1.2 percent.

The European currency edged up to 1.0777 against the franc, after falling to 1.0761 at 5:00 pm ET. On the upside, 1.10 is likely seen as its next resistance level.

Looking ahead, Canada retail sales for November and U.S. existing home sales for December are set for release in the New York session.