US Dollar Bruised and Battered: NFP Misses Expectations

Low Liquidity Warning: Expect Jerky Movement

Friday’s U.S. job data missed the mark by a landslide, with the Non-Farm Payrolls report leading the charge: forecast 238K VS actual 175K. This is actually the first time the NFP numbers came out below expectations since November 2023.

The Average Hourly Earnings ticked lower at 0.2% (previous 0.3%) and the Unemployment Rate rose to 3.9% (previous 3.8%). These are not terrible numbers but combined with the dovish stance adopted by Fed Chair Powell during Wednesday’s press conference, could mean the easing will come sooner than expected.

At the time of writing, the probability of a rate cut in June is only 8.4%, according to the CME FedWatch tool. But a lot can happen until the FOMC June meeting so let’s not speculate just yet.

Economic Calendar Highlights

In contrast with last week, which was sprinkled with market-moving events, this one doesn’t have anything major on the schedule. Banks in the U.K. will be closed all day Monday in celebration of Early May Bank Day and Wednesday will be the French banks’ turn to close, in observance of Victory Day.

Thursday, both French and German banks will be closed in observance of Ascension Day. However, the Bank of England will announce the interest rate at 11:00 am GMT and BoE Governor Bailey will hold the press conference at 11:30 am GMT. This will probably be the main event of the week.

The Prelim UoM Consumer Sentiment will be released Friday at 2:00 pm GMT. The survey tries to gauge consumer confidence in economic conditions and usually has a notable impact on the greenback.

Overall, banks will not be very active this week, hence the lack of economic releases. Also keep in mind that parts of the world are celebrating Easter and this will contribute to the lack of liquidity.

Technical Outlook – EUR/USD

During Friday’s trading session, EUR/USD rose to 1.0812 on the back of weaker-than-expected U.S. jobs data (most notably the NFP). However, the dollar bulls managed to erase some of the losses, bringing the pair down to 1.0760 by the end of the session.

The move up pierced the 50-day Moving Average and the resistance at 1.0775 but the daily candle did not close above any of these elements, so we could say there is rejection. If this is true, we can expect to see a drop towards 1.0635 during this week. However, the lack of economic releases and the possible low volatility may create some unexpected swings or jerky moves on the charts.