EURUSD dipped to the 1.2100 area for the first time since mid-May
Global stocks are mostly lower on Friday while the dollar holds steady following yesterday’s rally witnessed amid strong US jobless claims data. Risk sentiment deteriorated due to the resurgent inflation fears ahead of the crucial employment report due later today.
As a result, the USD index advanced to 3-week highs near 90.60 ahead of NFP data. The greenback jumped amid a combination of strong data and a rebound in US yields. Furthermore, NY Fed J.Williams deemed as premature any modification of the QE program for the time being, although he did not rule out that scenario in the future.
Against this backdrop, EURUSD dipped to the 1.2100 area for the first time since mid-May, receding from weekly tops in the 1.2250 region. In the process, the pair dipped below the 20-DMA that now represents resistance around 1.2170. A break below this level would bring the 100-DMA at 1.2040 back into market focus. On the data front, retail sales in the Eurozone contracted at a monthly 3.1% in April and expanded nearly 24% over the last twelve months.
Despite the current retreat, the broader outlook for the common currency remains constructive amid rising optimism on the recovery in the Eurozone.
Now, market attention shifts to the release of the monthly labor market, with payrolls seen adding 650,000 jobs in May. If the result exceeds expectations, the dollar could add to this week’s gains and send its rivals to fresh local lows ahead of the weekend. Also, Chief Lagarde will participate in a discussion panel on Climate in a BIS event later today.
Of note, gold prices are correcting lower since yesterday after peaking at $1,916 earlier in the week. The precious metal is now flirting with the 20-DMA for the first time in a month. Earlier in the day, the bullion extended losses to May 19 lows around $1,855.