EUR/USD: Nonfarm Payroll a miss, but wages save the day

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0566

View Live Chart for the EUR/USD

The US economy created 156K new jobs in December according to the monthly Nonfarm Payrolls report, missing expectations of 178K. Previous month figure, however, suffered an upward revision to 204K from 178K, while the unemployment rate ticked higher as expected, from 4.6% to 4.7%. The immediate reaction to the news sent the EUR/USD pair to a new weekly high of 1.0619, but the pair changed course and fell as the market focused on a sharp recovery in wages. According to the same report, Average Hourly earnings rose by 0.4%, against previous backdrop of -0.1%, whilst year-on-year wages rose by 2.9%, from previous 2.5%. The dollar retains part of the losses triggered by FED's Minutes, and the positive reading in salaries is just preventing it from plummeting.

The EUR/USD pair fell down to 1.0545 after the news, but bounced back, although it maintains a modest negative tone in the short term, as the pair struggles around the 23.6% retracement of the post-election slide around 1.0570, still unable to find direction. In the 4 hours chart, the price bounced from its 200 SMA, broken after the FOMC Minutes, whilst the 20 SMA maintains a sharp bullish slope below the current level, whilst technical indicators present a modest bearish slope, rather correcting overbought conditions than signaling a downward upcoming move.

AT this point, the pair needs to accelerate below the mentioned low, a quite unlikely scenario at this point, to be able to extend its slide towards the 1.0500 region. Below this last, the next bearish target comes at the 1.0440/60 price zone. Above 1.0620 on the other hand, the pair can extend its advance up to 1.0650, last week high, en route to 1.0710, the 38.2% retracement of the mentioned decline.

Support levels: 1.0545 1.0500 1.0450

Resistance levels: 1.0620 1.0650 1.0710

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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