2022 Starts With A Bang, NFP On Tap

Starting the Year with a Bang – Non-Farm Payrolls Report

For the last month of 2021, the EUR/USD has been stuck in a relatively tight range, mostly due to end-of-year holidays and lack of volume. The pair is now trading right at the 50 period Moving Average on a Daily chart, and if we combine this technical hurdle with the release of the NFP report scheduled for later in the week, we may be in for some interesting moves.

Key Events for the Week Ahead

Monday some banks across the world will still be closed, meaning that volume will still be low and there won’t be any major economic data releases. The first notable release of the New Year is scheduled for Tuesday at 3:00 pm GMT: the ISM Manufacturing PMI. This index acts as a leading indicator of economic health, derived from the opinions of about 300 purchasing managers. The expected reading is 60.4, a small drop from the previous 61.1; it could affect the US Dollar but don’t expect anything spectacular.

Wednesday we take an early look at the U.S. jobs situation with the release of the ADP Non-Farm Employment Change report scheduled at 1:15 pm GMT, and later in the day at 7:00 pm GMT, the FOMC will release the Minutes of their latest meeting. The document contains the details of the Fed’s latest monetary policy meeting and can have a strong market impact if it contains clues about future rate adjustments.

Thursday at 3:00 pm GMT we will get information about the performance of the U.S. Services sector with the release of the ISM Services PMI, and the main event of the week is scheduled for Friday at 1:30 pm GMT – the Non-Farm Employment Change, aka Non-Farm Payrolls. The report shows the change in the number of employed people during the previous month (excluding the farming sector) and is widely considered the most important gauge for the health of the U.S. jobs market. Friday’s reading is expected to show that 410K new jobs were created, versus December’s 210K.

Chart Analysis – EUR/USD

Currently trading at 1.1350, the pair is likely to continue its sluggish movement for at least a couple of days, due to the low volume that’s still present in the market. Since the bounce near 1.1175 support, the Euro erased some of the losses and the pair re-entered the diagonal channel seen on the chart below, which may suggest that we will see a touch of the upper side of the channel.

However, a bullish break of the channel is less likely, because the bearish trend line that represents the upper barrier, combined with the level at 1.1430 will act as resistance and will likely push the price lower. The 50 days Moving Average is another location where the current timid bullish price action may reverse.