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The fallout from the terrible manufacturing PMI in the US continues. The dollar continues falling across the board, and this also allows euro/dollar to climb to levels last seen on May 9th.

While the euro-zone enjoyed better than expected manufacturing PMIs of its own, the pair was lower before the publication. In order for these gains to hold, European figures need to improve. The focus is on Spain.

EUR/USD already fell to 1.2954 earlier in the day, as fresh tapering talk weighed heavily on the pair. However, the tapering bets have been reduced after the ISM manufacturing PMI in the US fell to contraction zone: 49 points.

In the euro-zone, manufacturing PMI surprised by rising to 48.3 points. While the US still has an advantage, the gap is now only 0.7 points instead of 2.9 points seen in April.

Nevertheless, the US is still growing, while the euro-zone has been in a recession for three quarters.

EUR/USD climbed as high as 1.3106 before sliding a bit lower, to 1.3095 at the time of writing. 1.31 resistance still holds. The next level is 1.3160, followed by 1.32. Support is at 1.3050, followed by 1.30. For more levels, events and analysis, see the euro to USD forecast.

The next important publication from Europe comes from Spain: the number of unemployed people. Usually this figure is very depressing, but has a limited impact on the euro.

This time is different, as Spanish PM Rajoy has released a thick hint and asked to “watch the employment numbers on Tuesday”. A change in Spain, which has an unemployment rate of 27.2%, could keep the euro up.

Here is a live chart of EUR/USD:[do action=”tradingviews” pair=”EURUSD” interval=”60″/]

Further reading:  Spain: Is the economy waking up from its siesta? 3 positive signs