Forex - Euro remains supported, dollar slides

New York (Dec 9)  The euro was trading close to six-week highs against the dollar on Monday and rose to fresh five-year highs against the yen, while the dollar was broadly lower as the latest U.S. jobs report continued to support market sentiment.

EUR/USD hit highs of 1.3720, the strongest level since October 31 and was last up 0.13% at 1.3722.

The pair was likely to find support at 1.3660 and resistance at 1.3750.

The U.S. economy added 203,000 jobs in November, well above expectations for jobs growth of 180,000, the Labor Department said Friday. The unemployment rate fell to a five year low of 7.0%.

The data bolstered optimism over the outlook for the U.S. economic recovery and reinforced expectations that the Federal Reserve will start scaling back its USD85 billion-a-month asset purchase program at one of its next few meetings.

The increase in risk appetite dampened safe haven demand for the dollar and the yen.

The yen remained under pressure amid heightened expectations that the Bank of Japan will have to expand its stimulus program in order to meet its target of 2% inflation by 2015.

Sentiment on the yen was also hit after data released on Monday showed that Japan's economy grew at an annualized rate of 1.1% in the third quarter, slower than the preliminary estimate for 1.9% growth and below forecasts for 1.6%.

A separate report showed that Japan unexpectedly posted a current account deficit in October.

EUR/JPY rose to session highs of 141.53, the strongest level since October 2008, and was last up 0.32% to 141.38.

In the euro zone, data on Monday showed that Germany's trade surplus narrowed in October as imports grew faster than exports, shrinking to EUR16.8 billion from EUR18.7 billion in September.

The data came a day after a report showed that Chinese exports rebounded strongly in November, adding to hopes that global demand is picking up.

The euro shrugged off a report showing that German industrial production unexpectedly declined by 1.2% in October, missing expectations for a 0.8% rise.

Elsewhere, the dollar was higher against the yen, with USD/JPY up 0.19% to 103.03, near the six-month high of 103.37 struck last Tuesday.

The pound was trading close to 27-month highs against the dollar, with GBP/USD up 0.18% to 1.6377 and was little changed against the Swiss franc, with USD/CHF dipping 0.03% to 0.8915.

The greenback was broadly higher against the Australian, New Zealand and Canadian dollars, with AUD/USD sliding 0.19% to 0.9085, NZD/USD down 0.21% to 0.8266 and USD/CAD rising 0.27% to 1.0662.

The Canadian dollar touched session lows after data showed that Canadian housing starts rose by 192,200 units in November, below expectations for a gain of 195,000.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, edged down 0.05% to 80.22.