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Fundamental Forex Analysis

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, popularly known as nonfarm payrolls (NFP). The report is scheduled to be released at 12:30GMT and the headline NFP is expected to show that the US economy lost another 8 million jobs in May as compared to the previous month’s disastrous loss of 20.5 million jobs. Meanwhile, the unemployment rate is expected to surge to 19.8%, a new post World War Two record.

How could the data affect EUR/USD?

The data will underscore the economic meltdown caused by the coronavirus pandemic. However, the fact that layoffs eased considerably in May might fuel hopes that the worst was over. This, in turn, would further boost the already upbeat market mood, which might do little to provide any meaningful respite to the US dollar bulls.

Meanwhile, Yohay Elam, Analyst Forex Crunch offered a brief technical outlook for the EUR/USD pair: “The Relative Strength Index on both the daily chart and the four-hour one is above 70 – pointing to overbought conditions. That implies a correction. Other indicators such as momentum remain positive.”

Yohay also provided important technical levels to trade the major: “The daily and 11-week high is 1.1383, which may serve as immediate resistance. Further above, 1.1410 was a temporary cap in March and is the next line to watch. The peak in that turbulent month of 1.1495 is the upside target. The daily low 1.1325 is the first support line. It is followed by 1.1255, which held EUR/USD down on Thursday, just before the surge. It is followed by 1.12 and 1.1150.”

Key Notes

US Non-Farm Payrolls May Preview: Context is everything

Nonfarm Payrolls Preview: Economic reopenings’ hopes to overshadow sluggish old numbers

EUR/USD Forecast: Overbought, so what? ECB fuel rally, Non-Farm Payrolls critical for next move

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, and therefore the reaction depends on how the market asses them all.

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