The euro traded close to six-week lows versus the greenback on Monday, as stronger than projected employment data from the United States, released on July 5th, bolstered expectations of a possible bond purchase tapering by the Federal Reserve soon.
EUR/USD pair fell to a session low at 1.2812 at 5:01 GMT, after which consolidation followed at 1.2827 (6:59 GMT). The cross erased 0.04% for the day. Support was expected at March 27th low, 1.2750, while resistance was likely to be encountered at July 5th high, 1.2905.
US dollar received enormous support after on July 5th the Bureau of Labor Statistics in the United States reported, that US economy managed to add 195 000 new job positions in June, significantly above the expected number of 165 000, while in May another 195 000 jobs were added, according to revised data. On the other hand, Unemployment Rate in the United States remained unchanged at 7.6% in June, compared to May, while experts had projected a decrease to 7.5%.
In the mean time, the euro was under ongoing pressure after European Central Bank President Mario Draghi said on July 4th, that the bank policymakers will maintain interest rates at current levels for an “extended” period of time, which, actually, could also mean a possible reduction in rates. The single currency almost ignored the news of Germanys seasonally adjusted trade balance, that came out earlier today. It was shown that countrys trade surplus narrowed in May to 14.1 billion EUR from 17.5 billion EUR in April. Aprils figure was revised down from 17.7 billion EUR previously. Experts had projected a surplus of 17.4 billion EUR. German export contracted at a considerable pace in May, following promising sales figures in April, which suggested economic recovery was still at risk, due to continuously weak demand by other countries in the euro region. Quite the opposite was the situation with import in Germany, which grew in May, favored by increasing domestic demand. Export amounted to 88.2 billion EUR in the month of May, the lowest figure since December 2012. German current account also registered a smaller surplus in May, 11.2 billion EUR, while in April the surplus was 16.7 billion EUR. Preliminary estimates showed a slow down at a smaller pace, regarding current account surplus, to 14.8 billion EUR.
The euro traded lower against the British pound as well, with EUR/GBP at 0.8616 at 7:21 GMT. The cross was up by 0.05%. Additionally, EUR/JPY pair also erased 0.17% to 129.56.
Later on Monday Germany was expected to release official data, regarding industrial production, while the finance ministers of Euro zone countries were conducting a meeting in Brussels.
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