The euro has moved higher on Monday and broke above the 1.22 line earlier. In the North American session, EUR/USD is trading at 1.2196, up 0.24% on the day.
The euro ended the week with gains, as the US dollar was broadly lower on Friday. Investors were not impressed with the US job numbers, which were certainly respectable but missed expectations. Nonfarm payrolls showed a solid gain of 559 thousand, much better than the previous release of 266 thousand but shy of the forecast of 650 thousand. It was a similar trend with wage growth, which climbed 0.5%, up from 0.2%. However, this missed the consensus of 0.7%.
Another employment release of note was the US NFIB survey, which indicated that openings in small businesses jumped to a record high of 48%. This appears to indicate that while the economy is producing jobs, this has not translated into job openings being filled. We will get a snapshot of the small business sector on Tuesday, with the release of the NFIB Small Business Index.
How strong is the recovery in Europe? The markets will be keeping a close eye on three key releases on Tuesday – the ZEW Economic Sentiment indexes for Germany and the eurozone, as well as eurozone GDP for Q2.
Both Germany and the eurozone have seen the ZEW reports accelerate sharply in 2021, and the May readings are expected to edge higher – the consensus is 86.0 for Germany and 85.5 for the eurozone. As for GDP, the second estimate forecast is -0.6%, which would confirm the initial estimate. With first-quarter GDP registering a decline of -0.7%, another decline would technically signify that the eurozone is in a recession. If the ZEW report and GDP miss expectations, investor apprehension could arise ahead of the ECB policy meeting on Wednesday and send the euro on its heels.
- EUR/USD is facing resistance at 1.2245. Above, there is resistance at 1.2325
- On the downside, there is support at 1.2095. This is followed by support at 1.2025
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-event
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