By William L. Watts, MarketWatch
FRANKFURT (MarketWatch)—The euro reversed an early loss versus the U.S. dollar Monday, marking a resilient start to the fourth quarter as investors await the Institute for Supply Management’s latest U.S. manufacturing index and a speech by Federal Reserve Chairman Ben Bernanke.
The ICE dollar index DXY -0.11% , which measures the U.S. unit against a basket of six rivals, slipped to 79.758 from 79.894 in North American trade late Friday.
The euro EURUSD +0.2919% traded at $1.2899 versus the dollar, up from $1.2866. Earlier, the shared currency dipped as low as $1.2802 as risk-oriented assets lost ground in Asian activity after China’s manufacturing purchasing managers’ index signaled a second month of shrinking activity.
Michael Derks, chief strategist at FxPro in London, said the shared currency attracted some “determined bids from systems’ buyers and sovereign-wealth funds,” while some traders were forced to cover short positions, propelling the currency pair back toward $1.29.
The euro has been in a downtrend, marked by lower lows and lower highs, since the Fed’s quantitative easing announcement in mid-September, Derks noted. It would take a break above Friday’s high at $1.2960 to break the downtrend, he said, while a fall below $1.28 would provide confirmation for traders bearish on the euro, he said.
“It is a fascinating arm wrestle, with the bulls not yet throwing in the towel despite the fact that the bears have been in the ascendancy for the past two weeks,” Derks said, in a note.
Fed Chairman Ben Bernanke is scheduled to deliver a speech on monetary policy later Monday. Ahead of that, the Institute for Supply Management is scheduled to release its latest manufacturing index at 10 a.m. Eastern.
Economists surveyed by MarketWatch expect the index to finish at 49.7 in September, little changed from 49.6 in August.
As with PMI readings, a figure of less than 50 would indicate contraction, but analysts said a reading near its current level would be unlikely to unsettle markets.
The WSJ Dollar Index XX:BUXX -0.05% , which measures the dollar against a broader basket, fell to 69.70 from Friday’s close of 69.77.
The British pound GBPUSD -0.0604% changed hands at $1.6144 versus the dollar, little changed from Friday.
The dollar traded at USDJPY +0.0064% 77.97 Japanese yen, up slightly from ÂĄ77.92.
The Australian dollar AUDUSD -0.0076% fetched $1.0366 versus its U.S. counterpart, down 0.1% from Friday.
The Reserve Bank of Australia, or RBA, will conclude its policy meeting Tuesday.
