Nonfarm payrolls and US tariffs to define EUR/USD and USD/JPY fate
InvestingOnline.com
6/07/2018, 01:23The Euro closed Thursday with gains versus the US dollar ahead of the famous Nonfarm Payrolls that will be released Friday on the American morning.
The market is expecting 195,000 new jobs created in the United States throughout June; it would mean a decline in the job-creating rate of May with 223,000 new jobs created.
The unemployment rate is expected to keep the 3.8% historical low rate in June. The labor force participation rate is likely to stay at 62.7%, and the average hourly earnings are waited to rise 2.8% in June, slightly more than the 2.7% increase performed on May.
As a pseudo-preliminary data, the ADP reported 177,000 new private jobs created in June, well below the 190,000 expected by the market. Most of the jobs were created in the Service-providing sector with 148,000 new jobs.
On the other hand, initial jobless claims rose for the second week in a row while continuing jobless claims rose in the June 23 week.
Finally, the employment component of the ISM non-manufacturing PMI dropped to 53.6 in June from 54.1 in May.
Tariffs on $34 billion worth of goods from China
US tariffs on China goods are scheduled to go into effect the Friday and China has announced retaliations. $34 billion worth of products from China will be imposed with new tariffs.
As well as the risk associated with the tariffs concern the fed, the forex market is worried too. The US dollar is a candidate to be shocked by any retaliation to the downside, or a rally due to its condition of safe heaven across the board, except the Japanese Yen.
EUR/USD and USD/JPY fate
USDJPY daily chart July 5
USD/JPY is trading in an asymmetrical triangle with a confluence of flat moving averages. The pair looks neutral, and a break of the triangle is needed to define future directions. The catalyst could be found tomorrow with NFP and, or, tariffs.
The USD/JPY technical analysis shows potential bearishness in the short term.
EURUSD daily chart July 5
On the other hand, EUR/USD is trapped in a 200 pips range between 1.1510 and 1.1715. The pair attempted to extends its recovery on Thursday with a new test of the upper zone of the range, but it got a rejection.
There are some signals of recovery for the single currency, but moving averages are aligned to the south. In any case, there are many levels that the pair needs to clear up before start believing in a robust recovery.
