- EUR/USD faltered just pips below the 1.0600 mark.
- ECB’s Nagel defended a move on rates as soon as this year.
- US Nonfarm Payrolls surprised to the upside in April.
EUR/USD comes under some selling pressure after the daily recovery stalled near the 1.0600 region at the end of the week.
EUR/USD remains capped by 1.0640
EUR/USD deflates from earlier peaks and now faces some selling interest following a positive surprise from the US docket after the economy added 428K jobs in April, while the Unemployment Rate stayed unchanged at 3.6% in the same period.
Further data from the labour market saw Average Hourly Earnings expand 0.3% MoM and 5.5% from a year earlier. The Participation Rate, in the meantime, ticked a tad lower to 62.2%.
Indeed, the greenback regains some ground lost in the wake of the mixed results from the US labour market, which in turn puts the pair under some downside pressure in a context where yields on both sides of the Atlantic continue to march higher.
What to look for around EUR
EUR/USD came under renewed downside pressure in the wake of the FOMC event. The downtick, however, seems to have met contention around 1.0480 so far this week, while the upside looks limited near 1.0640. The outlook for the pair still remains tilted towards the bearish side, always in response to dollar dynamics, geopolitical concerns and the Fed-ECB divergence. Occasional pockets of strength in the single currency, in the meantime, should appear reinforced by speculation the ECB could raise rates at some point around June/July, while higher German yields, elevated inflation and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.
Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Impact on the region’s economic growth prospects of the war in Ukraine.
EUR/USD levels to watch
So far, spot is gaining 0.32% at 1.0572 and faces the next up barrier at 1.0641 (weekly high May 5), followed by 1.0936 (weekly high April 21) and finally 1.1000 (round level). On the flip side, a breach of 1.0470 (2022 low April 28) would target 1.0453 (low January 11 2017) en route to 1.0340 (2017 low January 3 2017).
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