Will the NFP help the greenback?

Will the NFP help the greenback?

2023-09-01 • Updated

The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes. Following Fed Chair Jerome Powell's hawkish speech at the Jackson Hole Symposium, the probability of a November rate hike briefly rose to 57% but has now fallen to 40% due to the disappointing job openings data. The focus is now on August's upcoming Nonfarm Payrolls report, which is expected to show 170K jobs added and a steady 3.5% Unemployment Rate. Average Hourly Earnings, a gauge of wage inflation, will also be closely watched for its impact on the Fed's rate trajectory.

US Dollar - D1 Timeframe

UsDollarDaily-0109.png

After the initial reaction away from the supply zone, the US Dollar is heading back towards the same zone for a retest, which could serve as a basis for further decline toward the 50-day moving average support. Considering that experts are expecting a lower NFP outcome compared to the previous month, we can further project a likelihood of a weakness in the Dollar.

Analyst’s Expectations: 

Direction: Bearish

Target: 102.621

Invalidation: 103.771

EURUSD - D1 Timeframe

 EURUSDDaily-0109.png

EURUSD recently reached the demand zone, which immediately triggered a bullish reaction. At the moment, however, the price is retesting the trendline support as we await the outcome of the NFP report later today. It should be noted, though, that my sentiment on this remains purely bullish.

Analyst’s Expectations: 

Direction: Bullish

Target: 1.11655

Invalidation: 1.08350

GBPUSD - D1 Timeframe

GBPUSDDaily-0109.png

GBPUSD has been prepping for a bullish impulse for quite a while. The current price movement on GBPUSD seems to be forming a slight retest of the 100-day moving average before embarking on a bullish run. In the meantime, I believe the NFP report and its aftermath would set a clear precedent on what to expect from GBPUSD in the coming weeks.

Analyst’s Expectations: 

Direction: Bullish

Target: 1.28760

Invalidation: 1.25872

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

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