EUR/USD struggles after the disappointing US NFP data
- The EUR/USD dropped for the second straight day after the US NFP data.
- The country lost 140,000 jobs in December as states imposed lockdowns.
- The pair also reacted to the mixed economic data from Europe.
The EUR/USD is in the second straight day of losses as the market reacts to the mixed economic data from Europe and the first nonfarm payrolls (NFP) numbers of the year. It is trading at 1.2246, which is relatively lower than the year-to-date high of 1.2350.
US nonfarm payroll numbers
The US economy continued to struggle in December as more states announced lockdowns in their bid to deal with the coronavirus pandemic. According to the Bureau of Labour Statistics (BLS), the economy lost 140,000 jobs in December.
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That was worse than the median estimate of analysts, who were expecting the payrolls to come in at 70,000. The data was also worse than the estimate by ADP, who said that the economy lost 123,000 jobs.
The U3 unemployment rate remained at 6.7% while the U6 rate dropped to 11.7%. These two numbers measure the average number of people of working age who are unemployed and those who are working part-time for economic reasons.
The EUR/USD is also reacting to the participation rate, which remained unchanged at 61.5%, and the average wages that rose to 5.1% from the previous 4.4%.
These numbers will provide more incentive to Congress to provide more support to the economy. In the coming weeks, the Democrats-controlled congress will possibly pass a bill to increase the stimulus check from $600 to $2,000. Also, they will increase funding to state and local governments.
Meanwhile, the EUR/USD is also moving in reaction to the mixed economic data from Europe. Earlier today, data showed that imports and exports by the leading economies increased.
In Germany, imports and exports increased by 4.7% and 2.2% leading to a trade surplus of more than 16.5 billion euros. The industrial production rose by just 0.9% from the previous 3.4%. In France, total exports increased to 39.2 billion euros while exports rose to 42.9 billion euros.
EUR/USD technical outlook
On the four-hour chart, the EUR/USD pair has started to form a bearish divergence pattern. This is evidenced by the overall performance of the main oscillators, including the Relative Strength Index (RSI), Stochastics, and the MACD. You can learn more about these indicators in our free forex trading course.
The pair has also moved below the rising black trendline. Therefore, this is an indication that, in the near term, the pair will continue dropping, with the next level to watch being 1.2200.