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 12:30 GMT and is expected to show that the economy added 490K new jobs in March, down from the 678K reported in the previous month. The unemployment rate is expected to edge lower to 3.7% from 3.8% in February. Apart from this, investors will take cues from Average Hourly Earnings amid expectations for a more aggressive policy response to contain high inflation. 

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “It is becoming clear that the reconstitution of the labor market is not enough to prevent inflation from crippling the economic recovery. The crucial factor is consumer spending. About two-thirds of US economic activity can be directly traced to personal expenditures. The availability of jobs and the ability of workers to seek higher wages are the main supports for consumer spending.”

How could the data affect EUR/USD?

A stronger than expected reading would reaffirm market bets for a 50 bps Fed rate hike move at the next two meetings, which should push the US Treasury bond yields and the US dollar higher. Conversely, any disappointment could prompt some USD selling, though the reaction is likely to be short-lived amid fading hopes for a de-escalation in the Ukraine war. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside.

Meanwhile, Eren Sengezer, Editor at FXStreet, offered a brief technical outlook and outlined important technical levels to trade the major: “EUR/USD is trading below the 200-period SMA on the four-hour chart after managing to hold above that line mid-week. On the downside, 1.1040 (Fibonacci 50% retracement of the latest downtrend) aligns as the first support before 1.1020 (100-period SMA) and 1.1000 (psychological level, Fibonacci 38.2% retracement).”

“On the flip side, EUR/USD faces immediate resistance at 1.1080 (Fibonacci 61.8% retracement) before 1.1100 (psychological level, 200-period SMA). With a four-hour close above the latter, buyers could show interest in the shared currency and the near-term technical outlook could turn bullish. In that case, the pair could target 1.1160 (static level),” Eren added further.

Key Notes

  •  Nonfarm Payrolls March Preview: How long can plentiful jobs defray the dangers of inflation?

  •  Nonfarm Payrolls Preview: Three reasons for a downside surprise, triggering dollar buy opportunity

  •  NFP Preview: Forecasts from 10 major banks, another large gain for employment anticipated

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.