EUR/USD corrects lower to 1.0850 post-Payrolls

• EUR/USD reverses initial gains and revisits 1.0850.
• US Non-farm Payrolls surprised (largely) to the upside in January.
• The US unemployment rate dropped to 3.4%.

EUR/USD comes under further downside pressure and rapidly gives away the initial optimism, returning to the mid-1.0800s in the wake of another stellar print from the US jobs report on Friday.

EUR/USD: Gains appear limited near 1.1030 so far

EUR/USD picks up extra selling pressure after the release of the Nonfarm Payrolls showed the US economy added 517K jobs during January, largely surpassing initial estimates for a gain of 185K jobs. In addition, the December reading was also revised up to 260K (from 223K).

Further data saw the Unemployment Rate ticking lower to 3.4% and the key Average Hourly Earnings – a proxy for inflation via wages – rise 0.3% MoM and 4.4% from a year earlier. Additionally, the Participation Rate increased a tad to 62.4% (from 62.3%).

Later in the session, the attention will be on the release of the ISM Non-Manufacturing PMI.

EUR/USD levels to watch

So far, the pair is losing 0.37% at 1.0866. The breakdown of 1.0802 (weekly low January 31) would target 1.0766 (weekly low January 17) en route to 1.0648 (55-day SMA). On the other hand, the immediate up barrier comes at 1.1032 (2023 high February 2) followed by 1.1100 (round level) and finally 1.1184 (weekly low March 31 2022).