When is the US monthly jobs report (NFP) and how could it affect EUR/USD?

US monthly jobs report overview

Friday's US economic docket highlights the release of the closely-watched US monthly jobs data. The report is scheduled to be released at 12:30 GMT and market participants are expecting another strong headline print in August. The economy likely added 750K new jobs during the reported month, down from July's blockbuster reading of 943K. The unemployment rate is expected to fall to 5.2% from 5.4% in the previous month. That said, Wednesday's disappointing ADP report on the US private-sector employment might have forced investors to scale back their expectations from the official figures.

Meanwhile, analysts at Westpac were more optimistic about the report and explained: “As the economy continues to re-open, we expect another extraordinary month of job creation in August, circa 850K. The household survey is likely to report another decline in the unemployment rate in August, though the scale of this latest fall is anticipated to be modest at just 0.2ppts, taking the unemployment rate down to 5.2%. The reason this is the case is that participation should rise as unemployment benefits cease and workers who have stayed home to care for their family begin to return to the labour force. This will be a process that takes more than a year, but should gather pace in coming months.”

How could the data affect EUR/USD?

Ahead of the key release, the US dollar languished near one-month lows amid expectations that the Fed could wait for a longer period before rolling back its massive pandemic-era stimulus. A softer reading will reaffirm market speculations and exert some additional pressure on the already weaker greenback. This, along with the recent hawkish comments from a host of European Central Bank policymakers, should pave the way for an extension of the EUR/USD pair's two-week-old uptrend.

Given that the Fed has made labour market recovery a condition for policy tightening, another strong print could revive hopes for an imminent taper announcement at the upcoming September FOMC meeting. This could prompt aggressive short-covering move around the USD and set the stage for some meaningful corrective slide for the major.

Meanwhile, FXStreet's own Analyst, Yohay Elam, offered a brief technical outlook for the major: “The Relative Strength Index (RSI) on the four-hour chart is above 70, thus reflecting overbought conditions and the potential for a pullback after the rally. Such a drop could be temporary, as other indicators are pointing to the upside. Momentum is upbeat and the pair broke above downtrend resistance earlier this week.”

Yohay also offered important technical levels to trade the EUR/USD pair: “Resistance awaits at the daily high of 1.1885, followed by 1.1910, a peak seen five weeks ago. Further above, 1.1950 and 1.2015 are eyed. Support is at 1.1860, which recently capped EUR/USD and earlier held the pair up. It is followed by 1.1835, a recent low, and then by 1.1810 and 1.1780.”

Key Notes

  •  Nonfarm Payrolls August Preview: Sine qua non for the taper

  •  NFP Preview: How low can the dollar go? Extremely low expectations point to a greenback comeback

  •  EUR/USD Forecast: Three scenarios for critical Nonfarm Payrolls, two pointing down

About the US monthly jobs report

The nonfarm payrolls released by the US Department of Labor presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews and the unemployment rate are as relevant as the headline figure.