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 popularly known NFP report is scheduled for release at 13:30 GMT and is expected to show that the economy added 400K new jobs in December, up from the previous month's dismal reading of 210K. The unemployment rate is expected to edge lower to 4.1% from 4.2% in November. Given Wednesday's stellar US ADP report on private-sector employment, market participants are bracing for a positive surprise from the official figures.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “The availability of employment, the extremely low level of layoffs, the desire of many workers to improve their wages to cope with soaring inflation, and the vibrant US expansion, should give Nonfarm Payrolls a good December. Given the strength of the attendant indicators and the ADP result, risk is weighted to a substantially better number than forecast.”

How could the data affect EUR/USD?

Heading into the key release, a generally positive risk tone, along with softer US Treasury bond yields kept the US dollar bulls on the defensive and acted as a tailwind for the EUR/USD pair. That said, the divergence in monetary policy stance between the Fed and the European Central Bank (ECB) kept a lid on any meaningful gains for the major. A stronger NFP print would reaffirm hawkish Fed expectations and provide a fresh lift for the greenback. Conversely, any disappointment is more likely to be offset by growing acceptance for an eventual Fed liftoff in March. This, in turn, suggests that the path of least resistance for the pair remains to the downside and any attempted recovery move could still be seen as a selling opportunity.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “EUR/USD's near-term technical picture shows that the pair is struggling to find direction with the Relative Strength Index (RSI) indicator moving sideways near 50 on the four-hour chart. Moreover, the pair is currently fluctuating in a tight range in between the 100-period and 200-period SMA's on the same chart, reflecting its indecisiveness.”

Eren also outlined important technical levels to trade the EUR/USD pair: “In case US T-bond yields start to push higher after NFP data, the first target on the downside aligns at 1.1270 (static level) ahead of 1.1240 (static level) and 1.1200 (psychological level). Resistances are located at 1.1320 (50-period SMA), 1.1340 (static level) and 1.1360 (static level, post-ECB high).”

Key Notes

  •  Nonfarm Payrolls Preview: A strengthening labor market backs a tighter monetary policy

  •  US Nonfarm Payrolls December Preview: The labor market seconds Fed policy

  •  EUR/USD Forecast: Sellers move to sidelines while waiting for NFP's impact on rate hike bets

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.