US monthly jobs report overview
Friday's US economic docket highlights the release of the closely-watched US monthly jobs data for July. The popularly known NFP report is scheduled for release at 12:30 GMT and is expected to show that the economy added 250K jobs during the reported month, down from the 372K in June. The unemployment rate, however, is expected to hold steady at 3.6% in July. Apart from this, investors will take cues from Average Hourly Earnings, which could offer fresh insight into the possibility of a further rise in inflationary pressures.
According to Yohay Elam, Senior Analyst at FXStreet, "real or "whisper" estimates for the NFP stand at around 300,000 or even 350,000. A higher bar means a greater chance for disappointment." Nevertheless, any divergence from the expected readings would infuse some volatility and produce some meaningful trading opportunities in the FX market.
How could the data affect EUR/USD?
Heading into the key release, the US dollar regains some positive traction on Friday and exerts some downward pressure on the EUR/USD pair. Against the backdrop of the hawkish remarks by several Fed officials this week, a stronger NFP print would revive bets for a large rate hike move at the September FOMC meeting and lift the buck.
Conversely, a weaker reading would add to worries about a possible global economic downturn and continue to benefit the safe-haven greenback. This, along with the energy crisis in Europe, which might drag the Eurozone economy faster and deeper into recession, suggests that the path of least resistance for the EUR/USD pair is to the downside.
Eren Sengezer, Editor at FXStreet, outlines important technical levels to trade the EUR/USD pair: “First technical support seems to have formed at 1.0200, where the 20-period and the 50-period SMAs on the four-hour chart align. If the pair drops below that level and starts using it as resistance, 1.0150 (Fibonacci 23.6% retracement of the latest downtrend) and 1.0100 (psychological level, static level) could be seen as the next bearish targets.”
“On the other hand, interim resistance is located at 1.0230 (Fibonacci 38.2% retracement) before 1.0260 (100-period SMA). A four-hour close below the latter could be seen as a significant bullish development and trigger another leg higher toward 1.0300 (psychological level, Fibonacci 50% retracement),” Eren adds further.
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.