The dollar slipped for a second day on Tuesday after upbeat European factory data helped temper investor pessimism about the euro, while some traders favored the yen as the Nikkei average hit a 13-month high. Despite another piece of strong U.S. economic data showing factory growth surging to a seven-month high, traders said the market was looking beyond the Federal Reserve's expected interest rate rises over the coming months. The euro zone manufacturing data helped bolster expectations that the European Central Bank will hold interest rates steady. "We have to change our pessimistic view" on the single currency, said Kikuko Takeda, a currency analyst at Bank of Tokyo-Mitsubishi. "Such a change in the scenario was a support for the euro." The euro had fallen about 10 percent against the dollar this year in the face of the U.S. currency's widening interest rate advantage and amid tepid economic growth and concerns about political unity in the euro zone. Also lending the euro a boost, Russia's central bank said on Monday it had increased the share of euros in its target currency basket and cut the dollar's share. "The move by the Russian central bank seems to have had a psychological impact," said Mitsuru Sahara, a senior forex trader at UFJ Bank. "Some players sold the dollar and bought the euro after the news." The euro zone purchasing managers index, a barometer of strength in the economy, rose to 50.8 in July from 49.9 in June, data showed on Monday. That was above the 50.0 forecast by economists and suggested the industrial sector is moving from contraction to expansion. Meanwhile, the U.S. Institute for Supply Management's PMI rose to 56.6 in July from 53.8 in June, above Wall Street's estimates of a more subdued gain to 54.5.