U.S. Dollar Surges Ahead of Crucial NFP Report: What to Expect
The Impact of OPEC+ on the U.S. Dollar and the Fed’s Next Move
At the beginning of the week, the U.S. Dollar suddenly shot up, catching everyone off guard. It turns out that fears of inflation had once again reared their head, and this was caused by a surprise announcement from OPEC+, who declared their intention to further cut oil production. This unexpected news had traders speculating that the Federal Reserve may need to take action by increasing interest rates at the next meeting.
The latest data on U.S. consumer spending showed moderate growth compared to the previous month, inflation appeared to be cooling slightly while still remaining elevated.
For a while now the Fed stated that the rate pace will be data-dependent. This week the Non-Farm Employment Change report comes out, which is literally the most important jobs data in the U.S. We will likely see some very interesting moves at the time of the release, so get ready for it.
Key Data for the Week Ahead
The first important release is scheduled for Monday at 2:00 pm GMT: the U.S. Manufacturing PMI. This survey is a leading indicator of economic health but its impact as a standalone release is often low. However, it helps paint the bigger picture, alongside other indicators.
Wednesday at 12:15 pm GMT, Automatic Data Processing Inc. will release its version of the Non-Farm Employment Change report. It tries to mimic the NFP that comes out Friday and provides an early look at the employment situation in the U.S. The same day, at 2:00 pm GMT, the ISM Services PMI will be released.
Friday, banks in Europe and the United Kingdom will be closed in observance of Good Friday. Volatility may be affected. Friday at 12:30 pm GMT it’s time for the main event: the Non-Farm Payrolls, the Unemployment Rate, and the Average Hourly Earnings. Together, these three reports paint an accurate picture of the job situation in the U.S. The NFP is expected to show that 235K new jobs were created, lower than the previous 311K. The three reports will offer clues about the Fed’s next rate move.
Technical Outlook – EUR/USD
The pair is currently trading at 1.0825 and it looks to be headed toward 1.1000. Before making a run for 1.1000, we may see a test of the support at 1.0775. If the price rises to 1.1000 we will either see a double top, or a break of the previous high.
If the double top scenario comes true, this could mean that the uptrend is over or at least that it is a lot weaker. On the other hand, a break of the previous high would suggest increased bullish pressure (strong Euro, weak Dollar).
Up until the NFP release, we may see choppy movement, without clear direction. If all three reports point in the same general direction, expect some wild moves. Conversely, if we get mixed data, the result on the charts may be more difficult to interpret.
