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Forex News: Euro Weakens Ahead Of U.S. Employment Report

Euro Weakens Ahead Of U.S. Employment Report

06/04/2021 - 07:02:00 (RTTNews)

(RTTNews) - The euro declined against its major counterparts in the European session on Friday, as risk sentiment dampened ahead of U.S. nonfarm payrolls data for May, which could give clues about the recovery of the labor market and the future path of monetary policy.

Economists are projecting a job growth of 650,000 in May, compared to an increase of 266,000 jobs in April. The jobless rate is expected to fall to 5.9 percent from 6.1 percent in the previous month.

Strong U.S. data released overnight signaled a faster economic recovery and the possibility of an early tapering of QE by the U.S. Federal Reserve.

The data sparked a rally in the dollar, further weighing on the European currency.

Survey results from IHS Markit showed that Germany's construction sector contracted further in May largely due to the supply chain bottlenecks.

The construction Purchasing Managers' Index fell to 44.5 in May from 46.2 in the previous month. This was the lowest reading since February, when the sector was impacted by a bout of severe wintry weather.

The euro dropped to a 3-week low of 1.2104 against the greenback and an 8-day low of 133.38 against the yen, off its early highs of 1.2132 and 133.82, respectively. Next likely support for the euro is seen around 1.18 against the greenback and 129.00 against the yen.

The euro pulled back to 1.0952 against the franc, from a high of 1.0966 seen at 4 am ET. On the downside, 1.06 is possibly seen as its next support level.

The euro reversed from its early highs of 1.5843 against the aussie and 1.6990 against the kiwi, edging lower to 1.5791 and 1.6918, respectively. If the euro slides further, it may find support around 1.54 against the aussie and 1.66 against the kiwi.

The euro hit 0.8571 against the pound, its lowest level since May 12. The euro is seen locating support around the 0.84 area.

In contrast, the euro recovered from more than a 2-week low of 1.4666 against the kiwi and was trading at 1.4695. The euro is likely to test resistance around the 1.50 level.

Looking ahead, U.S. and Canadian jobs data and Canada Ivey PMI, all for May, as well as U.S. factory orders for April will be out in the New York session.

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