EUR/USD loses traction to near 1.0215 in Monday’s early European session, down 0.30% on the day.
The US labor market data boost the USD and act as a headwind for the pair.
The ECB's dovish bets contribute to the EUR’s downside.
The EUR/USD pair trades in negative territory for the fifth consecutive day around 1.0215 during the early Asian session on Monday. The US Dollar (USD) gathered strength on the upbeat US employment data for December, which is likely to support the US Federal Reserve's (Fed) stance to keep interest rates steady in January.
The US job growth unexpectedly rose in December while the unemployment rate fell to 4.1%, supporting the Greenback. Markets expect the Fed to hold the interest rate at the January meeting, with futures pricing after the employment report swinging to the expectation of just one rate cut this year. According to the CME FedWatch tool, traders have priced in odds of a single cut increased to 68.5% after the jobs report.
"The solid nonfarm payroll gain and decent earnings growth will keep the U.S. economic expansion on a sturdy foundation to start the year, and that will likely keep the Fed on the sidelines at the January meeting,” noted Scott Anderson, chief U.S. economist at BMO Capital Markets.
Across the pond, the dovish expectations from the European Central Bank (ECB) might weigh on the Euro (EUR) against the USD. Investors anticipate four interest rate reductions by the ECB, which are expected to occur at each meeting by summer. ECB policymaker François Villeroy said on Wednesday that while price pressures were projected to rise slightly in December, interest rates would continue progressing toward the neutral rate “without a slowdown in the pace by summer.”
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