US NFP Preview: what to expect of EUR/USD

Later in the NA session, the US Bureau of Labor Statistics will publish its Non-farm Payrolls for the month of August. Market consensus expects the US economy to have created 180K jobs during last month vs. July’s 255K and almost 300K jobs in June. A print in line with forecasts will add to the view that the economy is closer to the ‘full employment’, as per recent comments by Fed’s VP S.Fischer.

 According to ‘Rates, FX and Commodities Strategy’ at TD Securities, “The unemployment rate should drift modestly lower, falling to 4.8% from 4.9%, as the gain in household employment is partially offset by rising labor force participation as more workers move back into the labor force in search of new jobs”.

Regarding FX, EUR/USD has eased from recent highs beyond the 1.1200 handle, although it remains navigating in the usual pre-Payrolls sideline pattern, currently around 1.1180/85. On the upside, the area of 1.1210/20 offers a strong resistance, comprised of the 20-/100-day sma, yesterday’s high and the 2014-2016 resistance line. A break above this area will put back on the radar the 1.1260 region (retracement of the June-August up move) ahead of 1.1367 (August’s peak). On the other hand, the recent low and 200-day sma in the 1.1130/20 band emerges as the immediate support, ahead of 1.1043 (August’s low).