EUR/USD: Traders Await US Non-Farm Payrolls Report with Caution

Highlights

• EUR/USD down -0.06% ahead of US Non-Farm Payrolls
• US labor market feeling the effects of Fed’s interest rate hikes
• Non-Farm Payrolls expected to grow by 239,000 in March

Overview

The Euro is edging lower against the U.S. Dollar are Friday as traders await the release of the U.S. Non-Farm Payrolls report, due to be released at 12:30 GMT. Normally, we would expect to see a volatile reaction to this report, but the price action could be limited ahead of the long Easter weekend break. Furthermore, U.S. and European banks and institutions are closed today for Good Friday.

At 12:00 GMT, the EUR/USD is trading 1.0914, down 0.0007 or -0.06%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $100.81, up $0.19 or +0.19%.

Ahead of today’s closely watched Non-Farm Payrolls report, economic data in the United States suggested the labor market is feeling the effects of the Federal Reserve’s string of hawkish interest rate hikes in its attempt to cool down the economy and, in so doing, rein in inflation.

Economists polled by Reuters expect non-farm payrolls to have grown by 239,000 in March, following February’s 311,000 gain. The non-farm payrolls number has been far more prone to delivering upside surprises than misses in the last year or two.

Daily EUR/USD Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.0974 will signal a resumption of the uptrend. Taking out 1.1033 will reaffirm the uptrend. The main trend will change to down on a trade through 1.0517. This is highly unlikely. However, due to the prolonged rally in terms of price and time, the market is vulnerable to a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 1.0788 will change the minor trend to down. This will shift momentum to the downside.

The nearest resistance is a long-term 50% level at 1.0943. The closest support is a minor pivot at 1.0881, followed by 1.0843.

Daily EUR/USD Technical Forecast

Trader reaction to the minor pivot at 1.0881 is likely to determine the direction of the EUR/USD after the release of the U.S. Non-Farm Payrolls report at 12:30 GMT.

A stronger-than-expected reading will be bullish for the U.S. Dollar, which could put pressure on the Euro under 1.0881, with 1.0843 the first target.

A weaker-than-expected reading will be bearish for the U.S. Dollar, which could create some upside momentum for the Euro with 1.0943 the first target.

Side Notes:  The expected moves are based on chart levels and fundamentals, but we all know that trading volume moves the market. If volume remains below average then the EUR/USD may just straddle the minor pivot all day.