Investing.com -- EUR/USD fell back slightly on Friday a session after posting its strongest one-day session in six years, amid a strong U.S. jobs report and dovish comments from European Central Bank president Mario Draghi.
The currency pair traded in a broad range between 1.0836 and 1.0956 on the session before settling at 1.0875, down 0.0067 or 0.61% on the day. On Thursday, the euro surged more than 3% against the greenback after the ECB spooked global currency markets by implementing only limited easing measures at a closely-watched meeting in Frankfurt. In Thursday's session, the euro reached its highest level since early-November, erasing an entire month of losses in a frenzied day of trading.
EUR/USD likely gained support at 1.0549, the low from December 2 and was met with resistance at 1.1473, the high from Oct. 15.
At a highly-anticipated meeting on Thursday, the ECB's governing council left several key interest rates unchanged and opted not to increase the pace of its €60 billion a month quantitative easing program as many analysts expected. Instead, Draghi defied market expectations by only modest changes to the bond buying program, including a plan to extend it by six months through March, 2017.
On Friday, Draghi backtracked by noting that the ECB could employ further stimulus measures if needed, prompting investors to pile back into the euro short positions they abandoned a session earlier. Some analysts anticipate that EUR/USD could fall into parity as early as the start of next year, amid further signals of divergence between the Federal Reserve and the ECB.
Also on Friday, the U.S. Department of Labor reported that nonfarm payrolls in November increased by 211,000 on a monthly basis, above consensus estimates for gains of 190,000. It followed a robust report a month earlier when nonfarm payrolls surged by 271,000, placing a December rate hike by the Fed squarely on the table. There were further indications of strength in the labor market on Friday when the Bureau of Labor Statistics upwardly revised the October reading by 27,000 to 298,000.
Fed chair Janet Yellen sent further hints that the U.S. central bank will raise rates in less than two weeks with hawkish comments at two public appearances earlier this week. While testifying before the Joint Economic Committee on Capitol Hill on Thursday morning, Yellen said the economy needs to add fewer than 100,000 jobs a month to absorb the losses of those who fell out of the labor market in recent years. The labor market already appeared on solid footing before Friday's release, averaging gains of more than 200,000 jobs a month.
The unemployment rate in November held steady at 5.0%, while average hourly earnings ticked up by 0.2%. Hourly wages, which have been persistently sluggish throughout the year, were expected to increase between 0.1 and 0.3% on the month. The U-6 unemployment rate, a broader measure of labor underutilization, inched up 0.1 to 9.9%. The rate, which measures workers that are marginally attached to the market, as well as workers that are not currently looking for employment, stood at 11.4% last year at this time. The measure is a preferred gauge by Yellen, as the chair of the Federal Reserve weighs the nation's employment outlook.
Although Yellen indicated in a speech on Wednesday before the Economic Club of Washington that U.S. inflation remains well-below the Fed's targeted goal, she emphasized that the Fed has seen considerable improvement in the economy and labor market. While Yellen sent strong signals that the Fed could be on the verge of approving its first rate hike in nearly a decade, she noted that unforeseen economic and financial developments over the next few days could sway its decision.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, jumped more than 0.75% to an intraday high of 98.62, before retreating to 98.27 at the close.