EUR/USD extends gains to two-month highs above 1.2150 – Forex Crunch

  • After a brief recovery, US dollar resumes slide across the board.
  • EUR/USD testing the 1.2150 area, gains more than 150 pips in 24 hours.

The EUR/USD is trading slightly above 1.2150, at the highest levels since late February. After a pullback to the 1.2100 area, the pair resumed the upside, amid a sell-off of the US dollar.

The euro is rising for the second consecutive day in a row versus the greenback, accumulating a gain of more than 150 pips. A sharp decline of the dollar is driving the rally.

Following the release of the US employment report, the DXY tumbled. The index trades at the lowest since February 26, below 90.30. US yields bottomed following the report but during the American session rebounded. The 10-year yield stands at 1.55%, far from the 1.48% (daily low).

The Labor Department report showed lower-than-expected numbers and an increase in the unemployment rate to 6.1%. “The more muted 266,000 increase in non-farm payrolls last month is a clear disappointment, but, with much of the high-frequency data – including jobless claims – still improving rapidly, we doubt it signals the recovery is at risk. It could, however, indicate that labor shortages are becoming a significant drag”, explained analysts at Capital Economics.

The euro is holding onto strong weekly gains, reinforcing the current upside bias. The EUR/USD started the latest leg higher after being rejected from under 1.2000 and recovered the 20-day moving average. The next resistance might be seen at 1.2175.

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