U.S. Jobs Report To Determine Direction

Dear Traders,

The euro traded lower ahead of today’s highly anticipated U.S. jobs report, which may shed light on U.S. growth and whether the economy is strong enough for higher interest rates. The payrolls report is forecast to show a 200k jobs-increase for April but it would require an upside surprise in the headline figures of the report. We can speak of a strong jobs report if the unemployment rate shows a decline, average hourly earnings are on the rise and payrolls growth exceeds at least 220k. If there will be no upside surprise, supporting the case for tighter monetary policy in the near-term, the dollar could give up some of its recent gains.

The Non-Farm Payrolls report is scheduled for release at 12:30 UTC.

EUR/USD

It all depends on today’s key employment data, but from a technical perspective traders should focus on the overall picture. In the medium-term the euro is still trading within an upward-channel. Given the recent downward move we will now focus on the lower bound of that channel which is currently around 1.1360/40. If the euro breaks below 1.1335 we see chances of further losses towards 1.12 and 1.1150. If, on the other hand, the euro is able to climb again above 1.15 and farther 1.1530, it could even head for a test of 1.1630. However, if NFP data fails to impress, the EUR/USD could remain confined to a trading range between 1.15 and 1.1350.

Chart_EUR_USD_Daily_snapshot6.5.16

The British pound, however, refrained from trading lower than 1.4443. After a break below 1.4440, sterling could be vulnerable to further losses and we will shift our focus to lower targets at 1.4330. A current resistance is seen at 1.4520.

We wish all traders a profitable trading day but bear in mind that the trading on payrolls day is highly risky and is therefore not for the faint-hearted. Personally, we will not invest our weekly profits and take it easy today.

Have a beautiful weekend.

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