Hot US labor market to weaken EURUSD

03 April 2024 45
Hot US labor market to weaken EURUSD

Today at 19:15 (GMT+3), the ADP National Employment Report for March will be released in the US. The key indicator of this report that investors are focusing on is the change in the number of people employed in the US non-farm sector.

 

This report is a precursor to Friday's release of the National Employment Statistics, which includes a similar indicator - US Nonfarm Payrolls.

 

The ADP data often anticipates Friday's report and gives an idea of where the market is headed.

 

The ADP report is expected to show a slight increase in US Nonfarm Payrolls from 140K to 148K.

 

Friday's Nonfarm report, on the other hand, is expected to show a decrease in US Nonfarm Payrolls from 275K to 205K.

 

As is well known, the market has long been inclined to expect a softening of the Fed's policy, and it looks for confirmation in every report, indicator, or official's words. So when newly published information contradicts the expected ‘trajectory’ of traders' and investors' sentiments, market fluctuations become more volatile.

 

From a technical perspective, the EURUSD has formed a good support level on the daily timeframe in the 1.0700-1.0740 range. This support is provided, among other things, by the data indicating a decrease in inflationary pressures and a cooling of the US labor market.

 

What will happen to this support if today's and especially Friday's employment data show that the US labor market remains hot? In that case, it is likely that this support will be breached and EURUSD will go to the 1.0700 level, albeit in the short term.

 

Therefore, today traders will be closely monitoring the ADP report which, as mentioned, is a precursor to Friday's Nonfarm Payrolls.

 

The overall recommendation is to sell EURUSD if the employment reports come in higher than expected. Profit could be taken at the level of 1.0700.

Loss could be fixed at the level of 1.0800.

 

This content is for informational purposes only and is not intended to be investing advice.

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