02/10/2014 01:42 AST
In U.S. trading, EUR/USD was down 0.25% at 1.2598, up from a session low of 1.2584 and off a high of 1.2639.
The pair was likely to find support at 1.2570, Tuesday's low, and resistance at 1.2716, Monday's high.
The dollar gave back gains against the euro after the Institute of Supply Management reported that its manufacturing index fell to 56.6 in September from 59.0 in August. Economists had expected the index to decline less and come in at 58.5.
The employment sub-index slowed to 54.6 from 58.1 in the previous month, while the new orders sub-index fell to 60.0 from 66.7.
At the same time, separate data revealed that U.S. construction spending fell 0.8% in August to an annual rate of $960.96 billion. Analysts were expecting a decline of only 0.5%, and the day's data gave a few investors room to sell the greenback for profits.
The dollar has posted noteworthy gains against the euro and most other currencies on sentiments U.S. monetary policy will tighten while Europe and Japan remain loose, which kept the greenback in positive territory against its European counterpart.
The European Central Bank is due to announce its latest decision on interest rates and monetary policy on Thursday, and many investors avoided the single currency ahead of time.
Elsewhere on Wednesday, data showed that the U.S. private sector added more jobs than expected in September, which gave the greenback support.
Payrolls processor ADP reported that the U.S. private sector added 213,000 jobs last month, just ahead of expectations for jobs growth of 210,000. The economy created 202,000 jobs in August.
The report came ahead of Friday’s government nonfarm payrolls report, which includes both public and private sector employment.
The euro, however, remained in negative territory due to soft inflation numbers released earlier this week.
Eurostat, the statistics arm of the European Union, reported Tuesday that the euro area's annual inflation rate fell to a five-year low of 0.3% in September from 0.4% in August.
Core inflation, which strips out food, energy, alcohol and tobacco costs, came in at 0.7%, down from 0.9% in August.
Slumping consumer prices fueled market expectations for the European Central Bank to implement fresh stimulus measures to stave off deflationary threats after the bank unexpectedly cut rates to record lows last month.
A separate report released earlier this week revealed that the euro zone’s unemployment rate was unchanged at 11.5% in August.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.17% at 0.7777, and down against the yen, with EUR/JPY down 0.33% at 138.02.
On Thursday, expect markets to move on the European Central Bank's decision on monetary policy, which will be followed by a press conference with President Mario Draghi.
The U.S. is to publish the weekly report on initial jobless claims as well as data on factory orders.
Investing.com
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