Dollar gains fade, euro near 6-month highs

The euro gained ground against the dollar on Thursday, closing in on six-month highs boosted by optimism over the upcoming French presidential election vote on Sunday.

EUR/UD was up 0.47% at 1.0938 by 09.07 ET, not far from last week’s highs of 1.0950.

Centrist candidate Emmanuel Macron appeared to cement his position as the front-runner in a televised debate with far-right rival Marine Le Pen on Wednesday.

The single currency received an additional boost after data on Thursday showed that euro zone private sector growth rose to the highest level since 2011 last month.

Markit’s composite output index jumped to 56.8 in April, up from 56.4 in March.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.27% to 99.00 as the stronger euro weighed.

The dollar was trading at six-week highs against the yen, with USD/JPY up 0.16% at 112.92 after the Federal Reserve left the door open to two more interest rate hikes this year.

The Fed concluded its two-day policy meeting Wednesday afternoon, giving a positive assessment of the U.S. economy while keeping rates unchanged, as was widely expected.

The Fed said it expects the economy to rebound after hitting a soft patch in the first three months of the year, noting that the labor market looks solid and inflation is running close to its target.

Sterling was higher against the dollar, with GBP/USD rising 0.25% to 1.2899 after data showing that activity in the UK service sector accelerated to a four-month high in April.

The report indicated that economic growth seems to have accelerated at the start of the second quarter after slowing to 0.3% in the first three months of the year.

The dollar showed little reaction after economic reports showing that initial jobless claims fell more than expected last week, and the U.S. trade deficit narrowed slightly in March.

The Labor Department reported that the number of individuals filing for initial jobless benefits last week fell by 19,000 to 238,000 from the previous week’s total of 257,000, against expectations of a 10,000 decline.

At the same time the Commerce Department said the U.S. trade deficit shrank to $43.7 billion in March as both imports and exports declined.