Nonfarm Payrolls

The Bureau of Labor Statistics (BLS) is set to release the highly anticipated Nonfarm Payrolls (NFP) data for April on Friday at 12:30 GMT. Experts predict that the data will reveal a gain of 179,000 jobs, a decrease from March’s figure of 236,000. 

The US Dollar (USD) has been struggling to gain momentum due to dovish Federal Reserve (Fed) sentiments in the financial markets. The NFP report is expected to have a significant impact on the USD and the Fed’s policy outlook.

The Fed has recently increased its policy rate as expected but removed the comment suggesting further policy firming may be appropriate. Fed Chairman Jerome Powell commented on the labor market, noting that supply and demand were coming into better balance. 

Powell added that there were no promises, but it was possible to continue to have labor market cooling without significant increases in unemployment.

Investors are anticipating the NFP report, and economists expect that the economy added 179,000 jobs in April, with the unemployment rate remaining steady at 3.5%. The Average Hourly Earnings are forecast to remain unchanged at 4.2% on a yearly basis, and Labor Force Participation readings will also be closely watched.

Wells Fargo analysts predict that payrolls growth will continue to soften in the beginning of the second quarter. The labor market has slowly bent but not broken so far this year, and that is unlikely to change with April’s employment report.

The NFP report will be released on May 5, and market participants will closely watch the labor market data to determine whether the EUR/USD pair will continue to rally. A strong NFP report combined with hot wage inflation could lead to a re-assessment of a rate hike in June. 

If the report reveals a disappointing NFP print, close to 100K, it could confirm a pause in the Fed’s tightening cycle and even revive expectations for a rate cut later in the year.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the EUR/USD pair, stating that Euro bulls are hopeful as long as they hold above the upward-sloping 21-Day MA. 

The 14-day Relative Strength Index is pointing north above the midline, adding credence to the upside bias. Mehta also outlines important technical levels to trade the EUR/USD pair.


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