Investing.com -- EUR/USD closed Friday's session flat following a choppy, volatile session, as mixed U.S. economic data added further confusion as to whether the Federal Reserve could continue to lift interest rates before the end of March.
EUR/USD traded in a broad range between 1.0804 and 1.0931 before settling at 1.0927, closing unchanged from Thursday's settlement. After opening 2016 slightly above 1.08, the euro inched up by 0.6% against the dollar during the first week of the year. The euro is coming off a tumultuous year versus its American counterpart when it slumped approximately 10%, amid divergent monetary policies among central banks on both sides of the Atlantic.
EUR/USD likely gained support at 1.0538, the low from December 3 and was met with resistance at 1.1398, the high from Oct. 16.
On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) said in its December national employment report that nonfarm payrolls surged by 292,000 last month, significantly above expectations for a consensus gain of 200,000. The Labor Department also upwardly revised gains over the prior two months by 50,000, boosting new job totals to 252,000 in November and 307,000 in October. Before last month's historic interest rate hike by the Federal Reserve, Fed chair Janet Yellen indicated that increases of around 100,000 per month this year would be enough to show that the nation's labor situation had stabilized.
Within the report, jobs in the Professional Business Services category soared by 73,000, providing a leading indicator for future hiring. The construction sector also added 45,000 position, amid unseasonably warm temperatures. In addition, a spike of 34,000 in temporary jobs provided the Labor Department with further optimism for a larger dip in unemployment in the near future.
The unemployment rate remained unchanged at 5.0%, in line with consensus estimates. The U-6 unemployment rate, a broader gauge of the national employment situation, also stayed unchanged at 9.9%, remaining near its lowest level since May, 2008. The reading, which measures the total level of unemployed workers plus those marginally attached to the labor force, stood at 11.2% last December. The indicator also accounts for workers who are no longer looking for a job, but have looked for one over the last 12 months.
By comparison, the alternative measure of underemployment peaked at 18% in January, 2010, as the nation continued to recover from the Financial Crisis. The U-6 rate is a preferred measure of unemployment by the Fed, as it embarks on its first tightening cycle in a decade. On Wednesday, the minutes from the Fed's December meeting showed that the U.S. central bank plans to raise rates gradually this year, as inflation remains stubbornly below its 2% objective.
Still, there was some cause for concern throughout the report. Last month, average hourly earnings were flat, falling below consensus estimates of a 0.2% increase. The Labor Force Participation Rate also inched up modestly by 0.1% to 62.6%. While the number of job gains eclipsed analysts' expectations by a wide margin, nearly 40,000 were in the Food Services and Drinking Places category, which added almost 360,000 new positions in 2015.
Any rate hikes this year are viewed as bullish for the dollar, as foreign investors pile into the greenback in order to capitalize on higher yields.
Yields on the Germany 10-Year fell two basis points to 0.51%, while yields on the U.S. 10-Year dropped by 3.7 basis points to 2.116%. Yields on U.S. government bonds posted their highest weekly decline since early-October.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.50% to an intraday high of 99.27, before paring some of the gains to close at 98.45.