Overview of the monthly US employment report

Friday’s US economic docket highlights the release of the closely watched monthly US jobs data. The popularly known NFP report due out at 12:30 GMT is expected to show the economy added 490,000 new jobs in March, down from the 678,000 reported the previous month. The unemployment rate is expected to decline slightly to 3.7% from 3.8% in February. Apart from that, investors will take inspiration from the average hourly gains as a more aggressive policy response is expected to contain high inflation.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “It is becoming clear that rebuilding the labor market is not enough to prevent inflation from crippling the economic recovery. The crucial factor is household consumption. About two-thirds of US economic activity can be directly attributed to personal spending. 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 basis point Fed rate hike in the next two meetings, which should push US Treasury bond yields and the US dollar higher. . Conversely, any disappointment could lead to USD selling, although the reaction is likely to be short-lived amid fading hopes of a de-escalation of the war in Ukraine. This, in turn, suggests that the path of least resistance for the EUR/USD pair is on the downside.

Meanwhile, FXStreet Editor-in-Chief Eren Sengezer offered a brief technical perspective and outlined important technical levels for trading the major: “EUR/USD is trading below the 200-period SMA on the chart. four hours after successfully holding above this line mid-week On the downside, 1.1040 (50% Fibonacci retracement of last downtrend) lines up as first support before 1.1020 (100-period SMA) and 1.1000 (psychological level, 38.2% Fibonacci retracement).

“On the flip side, EUR/USD faces immediate resistance at 1.1080 (61.8% Fibonacci retracement) ahead of 1.1100 (psychological level, 200-period SMA). With a close of four hours above it, buyers could show interest in the common currency and the short-term technical outlook could turn bullish, in which case the pair could target 1.1160 (static level),” a Eren added.

Key notes

• March Snapshot of Nonfarm Payrolls: How Long Can Plentiful Jobs Cover the Dangers of Inflation?

• Nonfarm Payrolls Snapshot: Three Reasons for a Downside Surprise, Triggering a Dollar Buy Opportunity

• NFP Preview: Forecasts from 10 major banks, another big job gain expected

About the Monthly US Employment Report

The Nonfarm Payrolls released by the US Department of Labor shows the number of new jobs created during the previous month, across all nonfarm businesses. Monthly variations in the wage bill can be extremely volatile, due to their strong relationship with the economic policy decisions taken by the Central Bank. The number is also subject to strong revisions in the coming months, and these revisions 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 reviews of previous months and the unemployment rate are also relevant than the overall figure.