Dollar up on technical rebound after US payrolls

The euro surged against the dollar in the moments following the employment data and moved above the upper bands on some momentum charts frequently used by currency traders. This suggested the gain was exaggerated and not sustainable, and helped trigger the reversal.

The euro EUR dipped against the dollar, trading below the psychologically important $1.3000 level at $1.2976. The euro had hit a session high of around $1.3074 shortly after the payrolls data, according to electronic platform EBS, but then turned swiftly around.

“Traders got tired to trying to push the dollar through

$1.3040-$1.3050 levels, and since there was no flow to sustain the rise, the market just retreated,” said Brian Taylor, managing director for foreign exchange trading at M&T Bank in Buffalo, New York.

“We have more data coming and it may help determine the direction for the rest of the day,” he said.

The dollar extended gains against the yen, trading at a session high of 121.24 yen JPY.

The greenback got an additional boost against the euro after Market News International cited “well informed sources” saying the European Central Bank would likely raise interest rates but after that could be on hold for some time.

The final reading of the Reuters/University of Michigan US consumer sentiment index for January is due at 10:00 a.m. EST (1500 GMT).