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EUR/USD Supported after Soft US Data; NFP Ahead

On Wednesday, we saw disappointing ADP jobs report and a soft headline for US ISM Manufacturing, which has been decelerating since Q4 2014, The soft US data helped EUR/USD find support above the 1.07 handle as we can see in the 4H chart.

EUR/USD 4H Chart 4/2

(click to enlarge)

Note that the decline this week failed to bring price all the below below the cluster of 200-, 100-, and 50-period SMAs. Meanwhile, price never poked above the 200-period SMA during the rally in the second half of March. The 4H chart represents price mode in the past week or 2, and according to it, EUR/USD is squaring up at the crossroads ahead of tomorrow’s NFP.

Non-Farm Employment Change:

(click to enlarge; source: forexfactory.com)
Forecast: 247K
Previous: 295K

Economists are expecting a slide from February’s hot, 295K reading. A reading around 250K is decent and would actually be a positive sign towards the FOMC’s interest rate hike plans. However, we are very unlikely to see the move mid-year, which is probably going to hurt the USD a bit. So, unless the reading is close to 300K again, the jobs report will unlikely give the USD a boost.

However, against the euro, the USD should not retreat too much neither. Let’s see what happens after the NFP. A break below 1.07 puts EUR/USD on a bearish continuation or at least puts pressure on the 1.0462 low on the year up to the 1.05 handle.

EUR/USD Daily Chart 4/2

(click to enlarge)

A break above 1.1050 would bring in the 1.0270-80 area, a previous support pivot that could turn into resistance if the EUR/USD remains bearish (which it should unless the NFP report tanks and is close to 200K or lower).