US May Nonfarm Payrolls Preview

US May Nonfarm Payrolls Preview

This upcoming Non-Farm Payrolls (NFP) report on Friday will hold key information as to the state of the US labour market as well as the upcoming Fed interest rate decision later this month.

Fed Chairman Jerome Powell and company clearly expected to pause rate hikes after last month’s 25bps increase, but US economic data has remained resilient, despite concerns about the debt ceiling and the highest interest rates we’ve seen since the start of the century. Earlier this week, Fed Vice Chair nominee Jefferson came out in favour of “skipping” a rate hike at the June meeting, though continued strong economic data may force the Fed’s hand.

The next major hurdle for the US economy will be Friday’s NFP reading, which is expected to show nearly 200K net new jobs and wages to rise at 0.3% m/m.

A soft jobs report could present trading opportunities for the EUR/USD. The world’s most widely traded currency pair is testing previous support in the 1.0700 area and showing a potential bullish divergence on the 14-day RSI indicator. Any excuse for the Fed to pause will emphasize the monetary policy divergence between the ECB and the Federal Reserve, potentially boosting EUR/USD.

Have your trading charts ready at 15.30 GMT+3!

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