EUR/USD sinks to 1.0550 as dollar bounces on labor data

- Article Top Advertisement -
  • The EUR/USD pair falls to daily lows near 1.0550 on Thursday.
  • The US dollar continues to advance thanks to the good results of the labor market.
  • The US ADP report and weekly claims surprised to the upside.

Selling pressure on the dollar is now picking up further and dragging the EUR/USD back to 1.0550 on Thursday, or daily lows.

EUR/USD: Further drop could trigger a retest of 1.0520

EUR/USD quickly returned to negative territory in response to the sharp rally in the dollar, which is approaching the key 105.00 barrier as measured by the US Dollar Index (DXY).

- Article Inline Advertisement 1-

On the spot, losses accelerated after the US ADP report showed the US private sector added 235,000 jobs during December, beating earlier estimates. In the same vein, weekly jobless claims rose less than expected by 204,000 in the week to December 31, both data highlighting the resiliency and good health of the labor market.

The pair’s decline is also in line with the rally in US yields along the curve, while German 10-year bond yields also reverse some of the recent weakness.

- Advertisement -

Earlier on the euro agenda, Germany’s trade surplus widened to 10.8 billion euros in November (from 6.9 billion) and the construction PMI improved slightly to 41.7 in December. In Euroland, Producer Prices contracted 0.9% MoM in November and rose 27.1% YoY. In Italy, preliminary inflation figures put the CPI at 11.6% through December.

What to watch out for around the EUR

The EUR/USD pair appears to lack the conviction to break past the recent resistance zone near 1.0630 for the time being.

Looking ahead, the European currency is expected to closely follow the dynamics of the US dollar, the impact of the energy crisis in the region and the divergence between the Fed and the ECB.

Returning to the euro zone, the growing speculation about a possible recession in the bloc emerges as a major domestic headwind facing the euro in the near term.

technical levels

For now, the pair is down 0.43% at 1.0557 and a break of 1.0519 (Jan 3 weekly low) would target 1.0443 (Dec 7 weekly low) en route to 1.0314 (200-day SMA). Elsewhere, there is an initial hurdle at 1.0713 (weekly high Dec 30) before 1.0736 (monthly high Dec 15) and finally 1.0773 (monthly high Jun 27).

Source: Fx Street

- Article Bottom Advertisement -


Please enter your comment!
Please enter your name here

Hot Topics

Related Articles