Forex - EUR/USD drops as U.S. jobs report far surpasses expectations

Investing.com - The euro dropped against the U.S. dollar on Friday after the U.S. government revealed that far more hiring took place in February than expected despite declining federal spending, which fueled talk the Federal Reserve will soon wind down stimulus programs.

In U.S. trading on Friday, EUR/USD was down 0.89% at 1.2992, up from a session low of 1.2956 and off from a high of 1.3134.

The pair was likely to find support at 1.2929, the low from Dec. 11, and resistance at 1.3134, the earlier high.

The Bureau of Labor Statistics reported earlier that economy added 236,000 nonfarm payrolls in February, way more than an expected 160,000 increase and up above 119,000 reported in January.

The U.S. private sector added 246,000 jobs, beating expectations for a 167,000 increase, following January's 140,000 rise.

The headline unemployment rate fell to 7.7% in February from 7.9% in January, beating analysts' calls for the rate to remain unchanged.

The data came after the Department of Labor said on Thursday that the number of individuals filing for initial jobless benefits fell by 7,000 to 340,000 last week, defying expectations for an increase of 8,000 to 355,000.

The numbers sparked heavy demand for dollars on sentiment the Federal Reserve will wind down stimulus programs designed to create job demand by flooding the economy with liquidity to encourage investing.

The Fed is currently running a USD85 billion monthly bond-buying program known as quantitative easing, which weakens the dollar as a side effect, and Friday's jobs report stoked sentiments that such programs may wrap up sooner rather than later.

Meanwhile in Europe, Germany's official industrial production rate came in flat for January, missing expectations for a 0.5% rise and well below a 0.6% increase the previous month.

The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.29% at 0.8706, and EUR/JPY trading up 0.35% at 124.75.