- US Dollar Index erases daily gains after disappointing NFP data.
- Falling US Treasury bond yields weigh on greenback.
- EUR/USD pair erases around 50 pips this week.
The EUR/USD pair extended its rebound during the American trading hours and reached a fresh daily high of 1.1120 with the greenback struggling to find demand after disappointing labour market data. As of writing, the pair was up 0.12% on the day at 1.1118.
USD weakness helps pair recover
Earlier in the day, the US Bureau of Labor Statistics reported that Nonfarm Payrolls in December increased by 145,000 to miss the market expectation of 164,000. Furthermore, the Average Hourly Earnings only rose 0.1% on a monthly basis and dragged the annual rate to 2.9% from 3.1%.
In addition to the dismal data, falling US Treasury bond yields also weighed on the USD. As of writing, the 10-year US T-bond yield was down 2.5% on a daily basis and the US Dollar Index, which touched a fresh two-week high of 97.58, was erasing 0.08% on the day at 97.35.
Commenting on the market reaction to the NFP data, “the USD is a little softer following the disappointment relative to consensus, though we think this is much ado about nothing,” said TD Securities analysts. “On the whole, labor markets remain in decent shape though the deceleration in wage inflation since early 2019 may become a focal point for markets going forward.”
Despite today’s recovery, the EUR/USD pair remains on track to post weekly losses for the second straight week.
Technical levels to watch for