EUR/USD has drifted lower ahead of the US Employment Report, set to be released by the Bureau of Labor Statistics on Friday at 8:30AM ET. Looking at the weekly chart above we can see that price has fallen to a well defined long term uptrend line.
Wednesday’s data from ADP and Moody’s Analytics showed that companies added 241K positions as private-sector employment in construction and manufacturing strengthened. The figure beat analyst expectations of 208K.
The US Dollar Index rose to its highest levels in over a month on Thursday, as stocks rebounded and trade tensions with China eased. Investors are focused on US employment data for cues to Federal Reserve interest rate policy and in turn the outlook for the greenback.
In Friday’s US Employment Report analysts expect that in March 188K new non-farm jobs were created and that the unemployment rate fell to 4.0%, the lowest lowest since December 2000. Wage growth will be a key item to watch. Accelerating wage gains and falling unemployment could increase the likelihood of four interest-rate hikes in 2018 rather than just three.
A Non-Farm Payrolls figure above 250K would be very bullish for the US dollar, 175,000-200,000 would be relatively neutral and under 150K would be very bearish for the dollar. Key levels to watch in EUR/USD include the prior lows at 1.2163 and 1.2091. To the upside, a breach of 1.2475 will open the door for a potential move up to 1.2553.