Forex - EUR/USD hits fresh 4-1/2 year trough on data, Draghi

Investing.com - Investing.com - The euro hit a fresh four-and-a-half year trough against the U.S. dollar on Friday, as disappointing euro zone manufacturing data and comments by European Central Bank President Mario Draghi weighed on the single currency.

EUR/USD hit 1.2009 during U.S. morning trade, the pair's lowest since June 2010; the pair subsequently consolidated at 1.2017, declining 0.72%.

The pair was likely to find support at 1.1875 and resistance at 1.2171, the high of December 31.

Research group Markit earlier said that the euro zone's manufacturing purchasing managers' index fell to 50.6 in December from 50.8 in November. Analysts had expected the index to remain unchanged this month.

Germany's manufacturing PMI remained unchanged at 51.2 this month, in line with expectations, while France's manufacturing PMI hit 47.5 in December, down from 47.9 the previous month and confounding expectations for an unchanged reading.

Also Friday, European Central Bank President Mario Draghi said the risk of deflation in the euro zone cannot be excluded, signaling the possibility of large-scale quantitative easing measures.

"We are in technical preparations to alter the size, speed and composition of our measures at the beginning of 2015, should this become necessary, to react to a too-long period of low inflation", Draghi told German newspaper Handelsblatt.

Elsewhere, investors continued to focus on developments in Greece, where parliament was formally dissolved on Wednesday after Prime Minister Antonis Samaras failed earlier in the week to persuade lawmakers to back his candidate for head of state, casting the country's international bailout into doubt.

Parliamentary elections were set for January 25, almost 18 months before the current coalition's term was due to end.

Meanwhile, the dollar remained supported as a recent string of upbeat U.S. data sparked optimism over the strength of the country's economic recovery and added to expectations for the Federal Reserve to soon raise interest rates.

The euro was higher against the pound, with EUR/GBP advancing 0.48% to 0.7802.

In the U.K., Markit reported that the manufacturing PMI slipped to 52.5 this month from a reading of 53.5 in November. Analysts had expected the index to rise to 53.6 in December.

A separate report showed that U.K. mortgage approvals rose by £59,030 in November, beating expectations for an increase of £58,530. October's figure was revised to a £59,510 gain from a previously estimated £59,430 rise.