Forexpros – The euro rose against the U.S. dollar on Friday, paring some of the week’s losses as new expectations for fresh easing measures by the Federal Reserve were fueled by downbeat U.S. nonfarm employment data.
EUR/USD hit 1.3034 on Thursday, the pair’s lowest since March 15; the pair subsequently consolidated at 1.3093 by close of trade on Friday, tumbling 1.98% over the week.
The pair is likely to find support at 1.3010, the low of March 14 and resistance at 1.3158, the high of March 12.
The U.S. Department of Labor said on Friday that nonfarm payrolls rose by 120,000 in March, far lower than expectations for a 203,000 increase. The previous months figure was revised up to 240,000, from a previously reported 227,000.
In addition, the U.S. unemployment rate ticked down to 8.2%, the lowest since January 2009, from 8.3% in February.
The weaker-than-expected data revived expectations that the Federal Reserve may implement a third round of quantitative easing.
The single currency fell to a three-week low against the greenback on Thursday, after official data showed that German industrial production dropped 1.3% in February, more than expectations for a 0.5% drop and renewing concerns over the outlook for the bloc’s largest economy.
Meanwhile, European Central Bank President Mario Draghi warned that “downside risks to the economic outlook prevail” after the central bank kept its benchmark interest rate unchanged at a record low of 1%.
In the U.S., the Department of Labor saying that the number of individuals filing for initial jobless benefits in the week ending March 31 fell to 357,000, although falling short of expectations for a decline to 355,000.
Jobless claims have remained below 400,000, a level historically associated with an improving labor market, in 21 of the past 23 weeks.
The data came after a disappointing Spanish government bond auction on Wednesday added to concerns that Spain may be the next euro zone member to require a bailout.
Earlier Wednesday, data confirmed that the euro zone service sector contracted for the sixth time in seven months in March, increasing the likelihood that the economy has entered a technical recession.
The greenback strengthened broadly earlier in the week after the minutes of the Fed’s March meeting indicated that policymakers will refrain from launching a third round of easing unless the rate of economic growth falters or inflation drops below the central bank’s 2% targeted rate.
In the week ahead, investors will be eyeing a speech by Fed Chairman Ben Bernanke on Tuesday for any indications on what the future direction of monetary policy may be.
In addition, market participants will be watching developments in the euro zone, amid ongoing concerns over the threat of contagion from Spain.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 9
Markets in the euro zone will remain closed due to the Easter holiday.
The euro zone is to produce official data on investor confidence, a leading indicator of economic health.
Tuesday, April 10
In the euro zone, France is to release official data on industrial production, a leading indicator of economic health.
Elsewhere, Federal Reserve Chairman Ben Bernanke is due to speak at the Federal Reserve Bank of Atlanta Financial Markets Conference.
Wednesday, April 11
In the U.S., government data is to be released on import prices as well as crude oil stockpiles and the federal budget balance. The Fed is also to publish its Beige Book.
Thursday, April 12
In the euro zone, the European Central Bank is to publish its monthly bulletin. A report on industrial production in the single currency bloc is also to be released later in the day.
Also Thursday, the U.S. is to produce official data on the trade balance, as well as government data on producer price inflation and initial unemployment claims.
Friday, April 13
The U.S. is to round up the week with official data on consumer price inflation and a preliminary report by the University of Michigan on consumer sentiment, a key gauge of consumer spending. Fed Chairman Bernanke is also due to speak later Friday.
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