The European single currency traded firmly higher Friday after a stronger-than-expected reading of economic activity around the region underscored an ongoing recovery and improving price dynamics.

The IHS Markit Composite PMI reading of private sector activity in the Eurozone surged to 56.7 in March, the fastest pace in just under six years and higher than the February reading of 56.0. Its benchmark of the services sector tally also surprised, rising a full point to 56.5 and a 71-month high. The manufacturing sector reading, however, slipped to a two-month low of 57.2. Collectively, the figures suggest a first quarter GDP growth rate of around 0.6%, IHS Markit said.

"The Eurozone economy's throttle opened further in March, with business activity and hiring surging higher," said IHS Markit's chief economist Chris Williamson. "Employment growth is meanwhile the best seen for nearly a decade. "The acceleration in growth towards the end of the quarter, as well as improving trends in new business and an increased appetite to hire, suggest that strong growth momentum will be sustained into the second quarter."

The euro was marked 0.14% higher against the U.S. dollar at 107.98 immediately following the PMI release, after trading as high as 108.05 following a separate report on the German economy.

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IHS Markit readings in both German and France -- Europe's largest economies -- also showed activity hitting the fastest pace in nearly six years, with the manufacturing sector powering the advance in Germany and services supporting growth in France.

In Germany, the rate of private sector job growth was the strongest since March of 2011 while both input and output prices accelerated at a six-year high pace. Collectively, the figures suggest a headline inflation rate of around 2.1% for the whole of 2017, IHS Markit economist Trevor Calchin.

"Inflationary pressures continued to build, with input and output prices both rising at the fastest rates in around six years," he said. "IHS Markit is currently forecasting headline inflation to reach 2.1% over 2017 as a whole, and the latest official monthly data showed that consumer price inflation hit 2.2% in February - a four-and-a-half year high."

That dynamic will make for interesting reading at the European Central Bank, which targets an inflation rate of 'just below 2%' and is under increasing pressure to unwind some of its extraordinary stimulus measures -- including a -0.4% charge on money parked at the central bank overnight -- as consumer prices accelerate.

Last month, ECB President Mario Draghi told reporters in Frankfurt that the removal of a reference to using all of the Bank's available tools to fight deflation at its last rate-setting meeting should be seen as a "signal that there is no longer that sense of urgency in taking further actions while maintaining the accommodative monetary policy stance including the forward guidance ... but that urgency that was prompted by the risks of deflation isn't there."