EURUSD licks its wounds after a plunge
EURUSD is making shallow recovery attempts on Monday, struggling to make decent gains after a sell-off witnessed amid unexpectedly strong economic data out of the United States on Friday. Payrolls surged 266,000 in November while unemployment rate declined from 3.6% to 3.5%, to the lowest level since 1969. More importantly, average hourly earnings rose by 3.1%, above +3% expected.
Spectacular figures fueled dollar demand against major currencies, sending the euro to the lows around 1.1040. On Monday, the pair sees a limited upside bias, struggling to get back above the 100-DMA around 1.1065. Interestingly, the common currency fails to see fresh gains despite decent imports and exports data from Germany. This is in part due to a mixed risk sentiment at the start of the week, as investors turned cautious again, citing lack of progress towards a partial trade deal between the US and China despite the two countries continue to signal they are moving towards a deal.
In the short term, the pair will likely continue to follow risk trends, with market focus gradually shifting to the FOMC meeting that begins on Tuesday. As rate changes are not expected, traders will closely follow the tone by the central bank. In this context, the latest employment and wages data could serve as an argument for a pause in cutting rates, as the recession risks seem to be receding.
Spectacular figures fueled dollar demand against major currencies, sending the euro to the lows around 1.1040. On Monday, the pair sees a limited upside bias, struggling to get back above the 100-DMA around 1.1065. Interestingly, the common currency fails to see fresh gains despite decent imports and exports data from Germany. This is in part due to a mixed risk sentiment at the start of the week, as investors turned cautious again, citing lack of progress towards a partial trade deal between the US and China despite the two countries continue to signal they are moving towards a deal.
In the short term, the pair will likely continue to follow risk trends, with market focus gradually shifting to the FOMC meeting that begins on Tuesday. As rate changes are not expected, traders will closely follow the tone by the central bank. In this context, the latest employment and wages data could serve as an argument for a pause in cutting rates, as the recession risks seem to be receding.
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