The upcoming release of the Nonfarm Payrolls (NFP) report generates high anticipation among traders worldwide. The report is scheduled to be released later today and is expected to reveal an addition of 212,000 jobs for the month, with an estimated unemployment rate of 5.9%. It is of paramount importance for market participants to meticulously scrutinize the headline figures and the underlying details, such as labor force participation and wage growth. Given the anticipation of significant economic data releases, traders will be closely monitoring the market today with a keen eye on their potential impact on the US Dollar.
Overview
The upcoming release of the Nonfarm Payrolls (NFP) report generates high anticipation among traders worldwide. The report is scheduled to be released later today and is expected to reveal an addition of 212,000 jobs for the month, with an estimated unemployment rate of 5.9%. It is of paramount importance for market participants to meticulously scrutinize the headline figures and the underlying details, such as labor force participation and wage growth. Given the anticipation of significant economic data releases, traders will be closely monitoring the market today with a keen eye on their potential impact on the US Dollar.
Upcoming Economic Events
Friday, 12:30 pm (GMT+0): Employment Change (CAD)
Friday, 12:30 pm (GMT+0): Unemployment Rate (CAD)
Friday, 12:30 pm (GMT+0): Average Hourly Earnings m/m (USD)
Friday, 12:30 pm (GMT+0): Non-Farm Employment Change (USD)
Friday, 12:30 pm (GMT+0): Unemployment Rate (USD)
The Nonfarm Payrolls (NFP) report, a key economic indicator released by the US Bureau of Labor Statistics, has long been a focal point for investors and traders seeking insights into the health of the US labor market. The upcoming NFP release is eagerly awaited, especially after the previous report that provided both surprises and implications for the US dollar and related currency pairs.
Review of Previous NFP Release
Last week, the US Bureau of Labor Statistics (BLS) released its Nonfarm Payroll (NFP) report for February, which showed a growth of 275,000 in total Nonfarm Payroll employment, exceeding the market prediction of 195,000. However, the unemployment rate also rose by 0.2 percentage points to 3.9 percent, with an increase of 334,000 people to its tally, amounting to 6,458,000 unemployed individuals. A year prior, the jobless rate was 3.6 percent, and the number of unemployed people was 6.0 million.
The Labor Force Participation Rate remained unchanged at 62.5% for three consecutive months. Furthermore, the average hourly earnings for all employees on private Nonfarm payrolls increased from 5 cents to $34.57 in February, following an increase of 18 cents in January.
Impact on the US Dollar (USD)
The United States Dollar's (USD) reaction to the upcoming Nonfarm payroll (NFP) report is expected to be influenced by the degree to which the figures deviate from market expectations. In the event of a robust jobs report that exceeds the market forecasts, the USD may strengthen, signaling economic strength and raising optimism for an earlier-than-anticipated interest rate cut by the Federal Reserve. Conversely, a disappointing report may weaken the USD, leading traders to reevaluate the pace of the US economic recovery.
Currency Pairs to Watch
EURUSD
The EURUSD currency pair is known to exhibit an inverse correlation with the value of the USD. In the event of a stronger-than-anticipated NFP (Nonfarm Payrolls) report, a decline in the value of the EURUSD pair may be observed, with potential targets at 1.08225 and 1.07850. Conversely, a weaker report may contribute to an appreciation of the pair, with possible gains up to 1.08489 and 1.09051.
USDJPY
The exchange rate between the US dollar and the Japanese yen, also known as the USDJPY pair, is known to be highly sensitive to fluctuations in market sentiment and US economic indicators. In the event of positive NFP figures, it is anticipated that the pair may experience an upward trend, potentially peaking at 151.971 and 152.387. Conversely, if the data released is negative, the pair could experience a downward trend, potentially declining to 150.844 and 149.961.
GBPUSD
The release of the NFP may significantly impact the GBP/USD currency pair, resulting in increased volatility. In light of this, should the NFP report indicate a robust performance, the exchange rate may witness a decline towards the figures of 1.26231 and 1.25395. Conversely, a weak report may lead to an appreciation of 1.27166 and 1.27583.
AUDUSD
The Australian dollar (AUD) has a tendency to exhibit an inverse relationship with the United States dollar (USD). In the event of a strong non-farm payrolls (NFP) release, it is probable that the AUDUSD exchange rate may depreciate to 0.65960 and 0.65520, respectively. Conversely, if there is a weak jobs report, the exchange rate may experience an upward movement towards higher levels, 0.66382 and 0.66673.
It is, therefore, advisable to stay abreast of the NFP release and its potential implications on the currency market.
Technical Analysis
The EURUSD currency pair followed a downward trajectory since March 3, 2024, after reaching a high price of 1.09811. The price action led to the formation of a technical reversal to the downside, known as the failure swing traced by a lower peak at 1.09636 and a lower trough of 1.09007. The subsequent formation of successively lower peaks and lower troughs breached consecutive support levels until the forces of supply and demand eventually found equilibrium at 1.06945.
Subsequently, the price overtook the resistance levels at 1.07850 and 1.08225 as the bulls exerted upward pressure on the exchange rate. This upward momentum caused the exchange rate to reach the 23.6 and 38.2 percent Fibonacci retracement levels. The 50-period Moving Average supports the bullish outlook, while the Momentum Oscillator favors a downward scenario. Specifically, prices are trading above the Moving Average line, and the Momentum Oscillator is recording values below the 100 baseline.
Potential Upside Targets
In the event that the NFP results fail to meet expectations and a negative market sentiment ensues, there are four potential upside targets that traders may consider.
1.09007: The first target stands at 1.09007, representing the trough marked on March 12.
1.09426: The second target can be identified at 1.09426, which corresponds to the peak formed on March 21.
1.09636: The next potential price target is estimated at the high price reached on March 13.
1.09811: The fourth price objective can be determined at 1.09811, corresponding to the price of 1.07964, marked on March 8.
Potential Downside Targets
In case NFP jobs exceed expectations, traders may consider the following potential price objectives:
1.08225: The first target stands at 1.08225, representing the peak of 38.2 percent Fibonacci Retracement drawn from the swing high of 1.09811 down to the swing low of 1.07244.
1.07850: The second potential support is estimated at 1.07850, representing the 23.6 percent Fibonacci Retracement level.
1.07244: An additional downside target is observed at 1.07244, mirroring the swing low.
1.06945: Lastly, a potential support level could be calculated at 1.06945, aligning with the trough formed on February 14.
Conclusion and Considerations
The payroll report issued by the US Buraeu of Labor Statistics remains a key economic indicator that can significantly influence the direction of the US Dollar and related currency pairs. As such, traders and investors should remain alert and be prepared to adapt their strategies in response to the actual results as compared to market expectations. The upcoming release of the report, later today, holds the potential to shape market sentiment and impact global currency markets, making it a focal point for financial participants in the upcoming sessions. Therefore, it is imperative for market participants to closely monitor the forthcoming NFP payroll report and adjust their trading or investment plans accordingly.