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EURUSD: dollar retreats amid rising UST yields

Major currencies showed choppy dynamics at the end of the week. The Japanese yen (0.88%), the Australian dollar (-0.45%), the euro (-0.27%), the Swiss franc (-0.25%) and the Canadian dollar (-0.04%) all retreated against the greenback, while the British pound (+0.26%) and the New Zealand dollar (+0.48%) bucked the downtrend.

The EURUSD pair closed lower on Friday, April 2, down 0.13% to 1.1761. The US currency firmed marginally against its competitors, drawing support from a stellar US non-farm payrolls report.

In March, the American economy created more new jobs than expected. The increase was attributable to an upturn in the number of vaccinations and higher public funds to combat the pandemic.

According to the report, the number of non-farm payrolls shot up by 916,000 (vs. 647,000 expected), the steepest increase since last August. In addition, the January reading was revised upward from 166,000 to 233,000, and the February number from 379,000 to 468,000 jobs. In light of these adjustments, total employment in January and February was revised by +156,000.

The unemployment rate fell to 6.0% from 6.2% in February. The proportion of the working-age population was 61.5% against 61.4% in February. Hourly wages ticked down 0.1% compared to 0.3% in the previous month. On an annualized basis, the figure was 4.2% vs. 5.2%. The report was strong except for hourly wages.

Todays macro agenda (GMT+3)

  • 11:30 UK: mortgage loans (Q4)
  • 16:45 US: services PMI (March);
  • 17:00 US: ISM non-manufacturing business activity (March), factory orders (March)

Current outlook

The euro opened slightly higher in Asian trading, up to 1.1772. Buyers had pared all profit by the European open as virtually all major currencies entered negative territory. Dollar strength is supported by a rise in the 10-year UST yield to 1.72% from 1.70%, as well as Friday’s blowout US jobs report.

Volumes will be softer than usual ahead of the North American session as European trading is offline today in observance of Easter Monday. Support levels are at 1.1750 and 1.1732, so if the price action slips below 1.1732, the euro will not likely be able to retrace to Friday's high of 1.1787 until the end of the week. Today’s market will be thin, so any conclusions about the success of sellers can be drawn only around 15 GMT. The single currency will remain under pressure due to lockdowns and rising UST yields.

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