The EUR/USD pair advanced on Friday as the dollar weakened across the board following February's nonfarm payrolls report release.
At the time of writing, the EUR/USD pair is trading above its opening price at 1.0655, up 0.73%on the day, having reached a three-week high of 1.0700 in the aftermath of the report. After bouncing two-month lows earlier this week, the pair has dodged a bullet and is on track to post its second weekly gain in a row.
The U.S. Bureau of Labor Statistics reported the U.S. economy added 311,000 jobs in February, beating the market's consensus of 205,000 but down from the stunning January reading of 504,000 (revised from 517,000). On the other hand, wage inflation, measured by the average hourly earnings, slowed to 4.6% YoY, below the market's expectations of 4.7%. In addition, the unemployment rate unexpectedly rose to 3.6% from its previous reading of 3.4%.
The mixed job report tempered expectations of a 50 bps rate hike by the Federal Reserve at the March 21, 22 meeting. Odds of a 50 bps increase have fallen to around 40% from above 60% before the nonfarm payrolls data.
Additionally, the shutdown of the Silicon Valley Bank (BO:SVIL) by U.S. authorities on Friday raised concerns about the financial system, putting lower rate increases back on the table.
Against this backdrop, U.S. bond yields have fallen sharply, with the 10-year yield at 3.71%. The 2-year rate has dropped to 4.63% from above 5% earlier this week. Wall Street main indexes are posting losses of more than 1% each.
Next week's U.S. Consumer Price Index figures will also be key in shaping expectations ahead of the FOMC decision.
From a technical viewpoint, the EUR/USD short-term bias has improved, as indicators are entering positive territory on the daily chart, while the price has regained the 20-day Simple Moving Average (SMA).
A break above the 1.0700 level would pave the way to a steeper recovery, targeting the 1.0800 zone. On the other hand, short-term support levels could be found at 1.0570, 1.0530 (100-day SMA) and the 1.0500 psychological level.