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EUR/USD: Dollar under pressure due to weak US jobs data

  • EUR/USD is nearing a former support-turned-resistance line. 
  • Friday's dismal US data is likely powering gains and may continue to drive the pair higher in Europe. 

EUR/USD is better bid at press time and is closing on a former support-turned-resistance at 1.1132 – trendline rising from Nov. 29 and Dec. 24 lows. 

The greenback is flashing red, possibly due to the weak jobs data and wage growth figures released Friday. 

The Nonfarm Payrolls data showed the economy added 145K jobs in December, missing the expected print of 164K additions by a big margin. Further, downward revisions to previous months shed 15,000 jobs. 

More importantly, the average hourly earnings rose by 2.9% year-on-year in December compared to the 3.1% projection. That was the first below-3% print since July 2018. 

The anemic wage growth likely revived disinflation fears. As a result, the 10-year treasury yield fell by seven basis points to 1.81% on Friday and could extend losses on
Monday, further strengthening the bid tone around EUR/USD. 

The single currency could also draw bids on continued easing of US-China trade tensions. The US Treasury Secretary Steve Mnuchin was out on the wires on Sunday
informing markets that there will be talks on the phase-two of the US-China trade deal when the Chinese delegates arrive on January 15.

On the data front, the German Wholesale Price Index (WPI) for November is scheduled for release at 07:00 GMT. That data, however, seldom moves markets. All in all, the pair is at the mercy of the action in the treasury yields.  

Technical levels

 

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