EUR/USD - Two Opposite Signals From the US Job Market, and Today Shows Which Is Right

EUR/USD trades around 1.1520 today, just above the 1.1500 level. The daily range is very small so far. This often happens before an important report, because traders prefer to wait instead of opening new trades. Everything now depends on one number at 12:30 (UTC+0).

Here is what makes today unusual. Recent US job data sends two opposite signals. ADP, a private survey of company payrolls, counted only 44,000 new jobs in July, well below the 65,000 expected. That looks like a slowing job market. But weekly jobless claims fell to 199,000, and July had the fewest announced layoffs in two years. That looks like a strong job market.

So which signal is correct？ Today's official report will show the answer. Forecasts point to around 85,000 new jobs. Two other numbers in the same report matter just as much: the unemployment rate and wage growth. Wages are important because higher pay pushes prices up, and that keeps inflation high.

Why does this move EUR/USD？ A strong report makes a September Fed rate hike more likely. Higher US interest rates attract money into the dollar, so the euro falls against it. A weak report has the opposite effect.

There is a second force today. Oil rose about 3% on Thursday after an Iranian parliamentary committee started work on a law to block “hostile” ships from the Strait of Hormuz. Higher oil prices push inflation up, which also supports the case for a rate hike. Both forces point the same way for the dollar today.

EUR/USD key levels:

• Resistance: 1.1570, then 1.1620

• Support: 1.1500, then 1.1450

Watching: today's jobs report at 12:30 (UTC+0), wage growth inside it, Hormuz headlines, and oil prices.

By Born2trade market research department

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