Investing.com - The euro edged lower against the dollar on Monday, but losses were held in check amid expectations that the Federal Reserve will maintain loose monetary policy for longer after Friday’s surprisingly weak U.S. jobs report.
EUR/USD touched session lows of 1.3636 and was last down 0.10% to 1.3654, not far from Friday’s one-week high of 1.3686.
The pair was likely to find support at 1.3600 and near-term resistance at 1.3686, Friday’s high and the strongest since January 2.
The dollar remained on the back foot after Friday’s nonfarm payrolls report showed that the U.S. economy added 74,000 jobs in December, the smallest increase since January 2011 and well below expectations for 196,000 new jobs.
The unemployment rate fell to a five year low of 6.7% from 7% in November, but this was due in part to people dropping out of the labor force.
The report raised concerns that the Fed will adopt a more cautious approach to scaling back its stimulus program, after cutting it by USD10 billion in December, reducing it to USD75 billion-a-month.
In the euro zone, data released on Monday showed that Italian industrial output rose for a third consecutive in November, up 0.3% from a month earlier.
Meanwhile, Italian borrowing costs fell to the lowest level since the creation of the euro on Monday, as investors continued to regain confidence in the euro zone periphery. Italy’s treasury auctioned EUR4 billion of three-year bonds at a yield of 1.51%, down from 1.79% at a similar sale in November.
Elsewhere, the dollar was sharply lower against the yen, with USD/JPY falling to lows of 102.97, the weakest since December 18. The pair was last down 0.84% to 103.28.
The euro also hit one-month lows against the yen, with EUR/JPY dropping 1.01% to 140.95.