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Euro Boosted by Weaker US Dollar After Jobs Data. Can EUR/USD Break Higher?


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Euro Boosted by Weaker US Dollar After Jobs Data. Can EUR/USD Break Higher?

The Euro found support when the US Dollar weakened on Friday, but it has given up some ground in Asia today. How long will EUR/USD be range bound?

Euro, EUR/USD, US Dollar, Fed, ECB, Yields, AUD/USD - Talking Points

  • EUR/USD moved higher in the wake of jobs data and a Treasury sell-off
  • APAC equities were mixed with tech under pressure as rate hikes loom
  • Momentum might be building for EUR/USD. Will a trend emerge?
Euro Boosted by Weaker US Dollar After Jobs Data. Can EUR/USD Break Higher?

The Euro rallied half a percent on Friday after the US Dollar came under pressure after a mixed jobs report.

Non-farm payrolls missed estimates at 199k instead of 450k anticipated for December, while the jobless rate fell to 3.9% instead of 4.1% expected and hourly earnings beat forecasts at 0.6%

However, the Fed now look certain to be lifting rates at the March meeting and some commentators are now looking at 4 hikes this year. This is in contrast to a European Central Bank (ECB) that doesn’t look like moving rates anytime soon.

The market is also looking to place a timeline on when the Fed will start selling the assets that they have accumulated in their pandemic stimulus program.

The Australian Dollar had a good day after building approvals data was better than expected for the latest read, even though the previous print had a downward revision.

APAC equities were mixed with not much change, except for the Kosdaq. It was down over 1% after the Nasdaq had a similar session on Friday. Higher interest rates make technology stocks less attractive as they often require debt to fuel growth.

Asian bond markets came under pressure after the rout in Treasuries on Friday. Australia and New Zealand’s benchmark 10-year government bonds were both over 6 basis points higher in yield. Japanese government bonds (JGBs) did not trade today as they were on holiday.

Crude oil was slightly higher in Asian trade while gold was a touch lower.

Looking ahead, there will be some wholesale industries data out in the US and Atlanta Fed President Raphael Bostic is due to give an address.

 

EUR/USD Technical Analysis

EUR/USD remains in the 1.11861 and 1.13860 range that it has been in since November last year. These levels may continue provide support and resistance respectively. That low at 1.11861 is just above the June 2020 low of 1.11850.

However, we are starting to see higher lows as the price bumps up against the upper side of the trading band. These lows at 1.12738, 1.12347 and 1.12219 might provide support.

The short term simple moving averages (SMA) remain just below the price and the 10, 21 and 34-day SMAs have all just acquired a positive gradient. This could suggest that there is short-term bullish momentum evolving.

The 55-day SMA at 1.13688 and the 100-day SMA at 1.15192 may offer resistance.

Potential resistance could be at the previous highs and pivot points at 1.13830, 1.13865, 1.15133, 1.16694 and 1.16922.

Euro Boosted by Weaker US Dollar After Jobs Data. Can EUR/USD Break Higher?

Chart created in TradingView

 

Written by Daniel McCarthy, Strategist for DailyFX.com. 10th Jan 2022

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