Investing.com - The euro fell to the lowest levels in three months against the dollar on Wednesday after a string of upbeat U.S. economic reports underlined diverging monetary policy expectations between the Federal Reserve and the European Central Bank.
EUR/USD was last down 0.9% to 1.0856, the weakest since August 7.
The dollar strengthened across the board after data showing that hiring in the U.S. private sector posted solid growth in October.
Separate reports showed that the U.S. trade deficit fell to a seven-month low in September as exports rebounded, while service sector activity grew at a faster than expected rate last month.
Payroll processing firm ADP said the U.S. private sector added 182,000 jobs last month, ahead of forecasts for growth of 180,000.
In another report, the Commerce Department said the trade deficit fell 15% to $40.8 billion in September, the smallest deficit since February as exports rose 1.6%.
Also Wednesday, the Institute of Supply Management said its non-manufacturing purchasing manager's index rose to 59.1 last month from 56.9 in September, well ahead of forecasts of 56.5.
The robust data indicated that the economy is on a strong enough footing to support higher interest rates.
Investors were looking ahead to Fridays U.S. nonfarm payrolls report for indications on the likelihood of a December rate hike.
The Federal Reserve left rates on hold last week but indicated that it could still raise interest rates for the first time since 2006 at its December meeting.
Meanwhile, the single currency remained under pressure after European Central Bank President Mario Draghi indicated Tuesday that the option of further monetary easing was still on the cards.
Draghi said policymakers would re-examine the degree of monetary stimulus already deployed at their December meeting and reiterated that they remained willing and able to act to bolster price growth in the euro area.
The dollar was also higher against the yen, with USD/JPY advancing 0.26% to 121.38.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rallied 0.72% to 97.94, the most since August 10.