The euro dropped as the dollar saw hefty demand on Wednesday after a private-sector December jobs report blew past expectations and fanned market expectations for the Federal Reserve to wind down monthly asset purchases in the coming months.
In U.S. trading, EUR/USD was trading at 1.3587, down 0.21%, up from a session low of 1.3568 and off a high of 1.3656.
The pair was likely to find support at 1.3524, the low from Dec. 3, and resistance at 1.3775, Thursday''s high.
The dollar firmed after payroll processor ADP reported that private-sector nonfarm payrolls rose by 238,000 in December, surpassing consensus forecasts for an increase of 200,000. November’s figure was revised up to a gain of 229,000 from a previously reported increase of 215,000.
The numbers fueled hopes that the official December jobs report due out on Friday will meet or beat expectations as well.
The Federal Reserve has said it will pay close attention to indicators when deciding the fate of its USD75 billion monthly bond-buying program, and Wednesday''s data fueled expectations for the U.S. central bank to scale down purchases even further this year.
Fed bond purchases aim to prop up the economy by suppressing long-term borrowing costs, weakening the dollar as a side effect as long as they remain in effect.
Investors were eager for the release of the Federal Reserve minutes from its December policy meeting later in the day.
The U.S. jobs data overshadowed upbeat indicators out of Europe.
Data released earlier revealed that the euro zone''s unemployment rate remained unchanged at 12.1% in November, in line with expectations, while euro zone retail sales posted solid gains in November.
Retail sales rose 1.4% in November, the biggest rise since November 2001 according to Eurostat, the European Union''s statistical arm, recovering from a 0.4% fall in October and well above analysts'' forecasts for a 0.2% gain.
A separate report showed that German factory orders surged 2.1% in November, surpassing expectations for a gain of 1.5%.
The euro was down against the pound, with EUR/GBP slipping 0.55% to 0.8256, and up against the yen, with EUR/JPY trading up 0.04% 142.46.
On Thursday, the ECB is to announce its decision on benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.
Germany is to publish data on industrial production.
In the U.S., the Labor Department is to release its weekly report on initial jobless claims.