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 150K new jobs in January, down from the previous month's disappointing reading of 199K. The unemployment rate is expected to hold steady at 3.9%. Given Wednesday's awful US ADP report on private-sector employment, market participants are bracing for a negative surprise from the official figures.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “The January job signs are poor. Though the correlation between ADP and NFP is not impressive when private payroll losses are combined with the labor market indicators, the odds of a negative month rise considerably.”

Analysts at Citibank were more pessimistic and explained: “We expect a soft 70K increase in January Nonfarm Payrolls, although with substantial two-sided risks due to the greater than usual uncertainty surrounding worker shortages related to the spread of the Omicron variant. That said, we expect a clearer continued downward trend in the unemployment rate to emerge in coming months.”

How could the data affect EUR/USD?

Heading into the key release, the EUR/USD pair added to the overnight hawkish ECB-inspired strong gains and shot back closer to the January swing high, around the 1.1475-1.1480 region. The momentum was further sponsored by modest US dollar weakness. A disappointing NPF print would be enough to exert additional pressure on the already weaker greenback and set the stage for a further near-term appreciating move for the major. Conversely, a stronger reading might provide some respite to the USD bulls, though any immediate market reaction is likely to be short-lived amid diminishing odds for a 50 bps Fed rate hike in March. This, in turn, suggests that the path of least resistance for the pair is to the upside.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook for the major: “The 20-period SMA on the four-hour chart is about to make a bullish cross above the 200-period SMA, which could be taken as a sign that buyers remain in control of EUR/USD's action. The Relative Strength ındex (RSI) indicator on the same chart, however, is holding above 70, suggesting that the pair might need to make a technical correction before stretching higher.”

Eren also outlined important technical levels to trade the EUR/USD pair: “On the upside, 1.1480 (static level) aligns as the first resistance before 1.1500 (psychological level) and 1.1550 (static level). Supports are located at 1.1400 (psychological level), 1.1360 (static level) and 1.1320 (200-period SMA, 100-period SMA).”

Key Notes

  •  Nonfarm Payrolls Preview: Win-win-win for the dollar? Low expectations, weak greenback point higher

  •  ADP Employment Change and NFP: Omicron or ominous?

  •  EUR/USD Forecast: Euro rally could lose momentum on US jobs report

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.