There was more pressure for the Euro on Tuesday as eurozone manufacturing data weakened this month. However, a rally within the services sector stemmed losses.
The single currency has been battling against the Dollar in recent weeks as robust US labour data and indications of continuing inflation have increased bets the Fed will hike rates further than previously forecast.
In addition, S&P Global's flash Composite Purchasing Managers' Index (PMI) for the eurozone – viewed as a good indicator of the overall health of the economy – hit a nine-month high.
A service sector activity index also increased to its highest since June, whilst manufacturing fell at a steeper pace this month, according to the results from Tuesday's poll, Reuters reports.
"Certainly, the manufacturing numbers are disappointing, but what I would say is the services numbers are reasonably constructive," said CIBC Capital Markets' global head of currency strategy, Jeremy Stretch.
Wage inflation usually lasts longer in the services sector, Stretch added. As such, strong activity may indicate, the European Central Bank could be more likely to hike rates, therefore supporting the Euro.
The single currency was down 0.2% against the Dollar at $1.0667 at the time of writing. So far this month, it has lost almost 2% in value against the greenback.
Whereas the Dollar index has gained close to 2% up to now this month, on course for what could be its strongest performance since the 3.2% rally in September. The index is currently trading around the 104 mark, under the six-week top of 104.67 hits last Friday.
"The data momentum has been positive of late, but it's going to be hard for the next few months to assess where we should be at this stage of the cycle," according to Deutsche Bank strategist Jim Reid.
"There has no doubt been big improvements from gas price falls and loosening of financial conditions, but we're yet to see anything close to the full lag of monetary policy filter through to the US and Europe," he added.
Moreover, the Pound rose 0.3% against the Dollar to $1.2071 and rallied 0.5% against the Euro to 88.36 pence, as data revealed better-than-forecast business activity in the UK at the beginning of the month.