Forex - EUR/JPY close to 5-week low in risk-off trade

09/04/2012 23:11 AST

The euro was trading close to a five-week low against the yen in holiday thinned trade on Monday, after Friday's disappointing U.S. jobs data cast doubts over the strength of the U.S. economic recovery and boosted safe haven demand.

EUR/JPY hit 106.18 during European morning trade, the pair's lowest since March 7; the pair subsequently consolidated at 106.31, shedding 0.54%.

The pair was likely to find support at 105.63, the low of March 6 and resistance at 106.83, the session high.

The U.S. Department of Labor said Friday that nonfarm payrolls rose by 120,000 in March, the lowest since December and well below expectations for a 203,000 increase.

It was the first time since November that hiring failed to top the 200,000 level, renewing concerns over the health of the U.S. economy.

The unemployment rate ticked down to 8.2%, the lowest since January 2009, from 8.3% in February. However, the data showed that the decline stemmed entirely from people dropping out of the labor force.

The weaker-than-expected data revived expectations that the Fed may conduct a fresh round of quantitative easing, which would weaken the dollar.

The yen was little changed after official data earlier showed that Japan posted a larger-than-expected current account surplus of JPY1.17 trillion in February, after swinging to a record deficit of JPY437.3 billion the previous month.

Meanwhile, in China official data released earlier showed that consumer price inflation rose by 3.6% last month, up from 3.2% in February and above expectations for a 3.3% increase.

The yen was also higher against the U.S. dollar, with USD/JPY down 0.42% to hit 81.29.

Trading volumes were expected to stay light on Monday, with markets in the U.K. and the euro zone closed for the Easter holidays.

ForexPros