The dollar fell broadly on Friday after a disappointing non-farm payrolls report nL1N2KA34D halted its recent rally, though a string of strong economic reports recently and an advancing COVID vaccination drive suggested the U.S. currency could shrug off this setback.
Market reaction to the data indicated that expectations for payrolls may have grown optimistic before Friday's release in the wake of robust ISM and ADP reports earlier in the week.
Downward revisions to November and December figures made for particularly dour reading.
EUR/USD broke above the previous session's high, trading at 1.2048 on EBS late on Friday as the dollar retreated with sliding U.S. yields, while equities and commodities rallied.
While the daily charts sent a warning to EUR/USD shorts -- with a bullish engulfing candle and diverging RSI -- monthly studies remained bearish, suggesting that the euro could be sold on rallies.
The data could bolster the drive by President Joe Biden and his Democratic allies in Congress to enact their $1.9 trillion COVID-19 relief package, which took a step forward on Friday and could be approved by March 15, when special unemployment benefits added during the pandemic expire. nL1N2KB0UF.
Before the payrolls release, USD/JPY rallied above 200-DMA resistance at 105.60, and momentum had already shifted to bulls on Thursday when it broke above 105.38, the 50% Fib of July 2020-January 2021 dip.
A close above 105.38 would set the stage for a run higher as entrenched yen longs grow uncomfortable near 106.
GBP/USD regained the 1.37 handle after the payrolls data. The pound has held firm near 2021’s 1.3759 high, with the UK's rapid vaccine roll-out bolstering the view that Britain can recover more quickly than other countries.
Friday's U.S. payrolls weakness could be the catalyst bulls need to push cable toward the 1.40 area.
AUD/USD soared 0.90% by late U.S. trade, overtaking the 10-DMA as U.S. stimulus expectations supported risk and rising commodities prices -- on the back of U.S. dollar weakness -- lent a hand to the aussie.
Canadian jobs data was weak as well, with both part-time and full-time employment coming in weak, but USD/CAD fell as U.S. dollar weakness overwhelmed other market reactions.
USD/CAD moved below key 10-day moving average support at 1.2787, shifting momentum back to the bears.
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