EUR/USD and USD/JPY Analysis Ahead of the Crucial NFP Report

The dollar was traded higher against almost all the major currencies on early Wednesday and Thursday as the private payrolls surpassed forecasts and added 172k workers in June vs 168k expected. The services sector added 208k while the goods-producing sector lost 36k. A relief signal for the investors ahead of the NFP report especially after the negative surprise of the last NFP figure. The report is expected to show that the U.S. economy is expected that gained 175k non-farm jobs in June. The previous month, the U.S. jobs report disappointed the market participants and decreased sharply the odds for a rate hike. The headline non-farm payroll number came out 38k, the weakest in three years and by far below forecasts of 164k in May. The unemployment rate is predicted to rise back at 4.8% versus the 6-year low 4.7% of May. In addition, the average hourly earnings for June are expected to have risen 0.2%, as the month before.


The main question is will the Fed raise interest rates for a second time following the worst release in almost six years and the Brexit vote? Maybe, they will be a little more patient until the market digest the Brexit and until more data will be available for the policymakers to ensure the stability of the labour market. Thus, today’s NFP report for June will be the last major employment data to be released before the highly anticipated FOMC meeting at the end of July, which is less than three weeks from now.

EUR/USD – Technical Analysis
The EUR/USD pair over the last two weeks has established and traded within the 1.1190 resistance level and the 1.1025 support level. Currently, the pair is recording a positive day and is trading exactly below the 50-SMA on the 4-hour chart. Now, if the NFP data today announced more than the expected jobs, which means above 175,000, our expectations are a downward move until the 1.1025 significant support level or furthermore until the 1.0970 level. In contrast, if we see a worse than expected reading with less than 100,000 new jobs, the price will have an upward potential move up to the 1.1190 resistance level if there is a break to the upside the 1.1130 support level. On the 4-hour chart, technical indicators are in a bearish territory but both of them (MACD and RSI) are sloping upwards near their mid-levels.


USD/JPY – Technical Analysis
The USD/JPY pair is looking much more bearish, following the aggressive sell-off from the Brexit’s vote on June 24. The pair plunged more than 2% so far this week and is now threatened to deliver a fifth negative day in a row. Most investors expect a strong recovery in job growth after last month weak report and with such a view we would expect the dollar to be trading higher against the yen instead of the consecutive negative sessions. The currency, over the last hours, broke the significant weekly support at 100.65 but looking beyond non-farm payrolls we expect the price to find a bottom above 100.00. A break of the latter psychological level price will move on towards the 99.00 support level. An alternative scenario is a rose above the 100.65 level which will open the doors to the 101.40 level and 102.30 strong resistance level. The MACD oscillator is still moving in negative territory while RSI is flattened near the 30 level.