The EUR/USD currency pair remained stagnant on Wednesday following the Federal Reserve’s decision to keep interest rates unchanged, which was widely expected by the markets. The focus has now shifted to the upcoming US Nonfarm Payrolls (NFP) report for July, which is scheduled to be released on Friday.
Investors are eagerly awaiting the NFP report, as it is expected to provide insights into the health of the US labor market. Market consensus suggests that there will be a decrease in job additions for July, with forecasts indicating a net addition of 175K jobs, down from the previous month’s figure of 206K. Federal Reserve Chairman Jerome Powell has highlighted the importance of labor market data in the Fed’s decision-making process, making the upcoming NFP report a crucial piece of economic data.
From a technical standpoint, the EUR/USD pair is currently hovering around key levels, with support at the 50-day Exponential Moving Average (EMA) at 1.0818. The pair has been trading in a narrow range, just above the 200-day EMA at 1.0796. While the pair is still below the recent swing high near 1.0950, there are signs of upside momentum building, supported by long-term technical averages. Bidders are expected to push the pair towards the higher end of the range, despite the presence of a descending channel limiting bullish momentum.
The Nonfarm Payrolls (NFP) report is a crucial component of the US Bureau of Labor Statistics monthly jobs report. It measures the change in the number of people employed in the US, excluding the farming industry. The NFP figure plays a significant role in shaping the Federal Reserve’s monetary policy decisions, as it provides insights into the employment situation and inflation trends in the economy.
A higher-than-expected NFP figure is typically positive for the US Dollar, as it indicates a strong labor market and potential for higher interest rates. Conversely, a lower NFP figure could lead to a weaker US Dollar, as it suggests a slowdown in job creation and economic growth. The NFP report also has implications for other asset classes, such as Gold, which tends to move inversely to the US Dollar based on NFP data.
In conclusion, the upcoming US Nonfarm Payrolls report is expected to have a significant impact on the financial markets, particularly the EUR/USD currency pair. Investors will be closely monitoring the NFP figures to gauge the health of the US labor market and its implications for Federal Reserve policy. The technical outlook for the EUR/USD pair suggests a potential for upside momentum in the near term, supported by key technical levels.