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 February, down from the 467K reported in the previous month. The unemployment rate is expected to edge lower to 3.9% from 4.0% in January. Given Wednesday's upbeat US ADP report on private-sector employment, market participants are anticipating a positive surprise from the official figures.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “These labor market statistics, especially the declining claims numbers and the record number of available jobs, backed by strong retail sales and high levels of business orders, argue for continued high levels of hiring.”

Analysts at Wells Fargo sounded more optimistic and offered a brief preview of the report: “Our forecast of 450K new jobs in February is predicated on lower COVID-19 cases, robust labor demand and improving labor supply. We project that US employment will recover to its pre-pandemic level by year-end, giving the Fed plenty of cover to tighten monetary policy at a steady pace this year as the central bank gets above-target inflation.”

How could the data affect EUR/USD?

Heading into the key release, a further escalation in the Russia-Ukraine war triggered a fresh leg up in the US dollar and dragged the EUR/USD pair below the 1.1000 mark for the first time since May 2020. A stronger than expected NFP report could provide an additional lift to the greenback and continue exerting downward pressure on the major. Conversely, any disappointment is more likely to be overshadowed by the worsening situation in Ukraine and might do little to lend any support. This, in turn, suggests that the path of least resistance for the USD is to the upside and down for the pair.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook and outlined important technical levels to trade the major: “The Relative Strength Index (RSI) on the four-hour chart is now slightly below 30, showing that the pair is technically oversold. Hence, 1.1000 (psychological level) support could hold in the short term and the pair could stage a correction before the next attempt. In case buyers fail to defend that support, the next bearish target is located at 1.0960 (static level).”

“On the upside, former support of 1.1060 now aligns as initial resistance. The descending trend line coming from Monday reinforces that resistance as well. As long as this level stays intact, sellers should continue to dominate the pair's action. Above 1.1060, 1.1100 (psychological level, 20-period SMA) could be seen as the next resistance before 1.1150 (static level),” Eren added further.

Key Notes

  •  US Nonfarm Payrolls February Preview:  Fed policy runs through Kyiv

  •  NFP Preview: Forecasts from 10 major banks, potential for upside surprise

  •  EUR/USD Forecast: Bears to retain control unless euro reclaims 1.1060

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.