Summary:
- The NFP report could confirm a strong labour market in the US (Friday, 1:30pm BST)
- The Fed seems bound to increase rates in September
- EURUSD awaits a breakout from a range
The Fed refrained from changing interest rates in August but an upbeat view on the economy seems to suggest a third interest rates increase this year at the September meeting. This has pushed the EURUSD pair slightly down but the pair remains within a range. Can the NFP report provide a long awaited impulse? The report is among the most widely traded as it provides a broad set of important indicators – the unemployment rate, employment change and wage growth.
What to expect from the report?
Markets typically focus on the employment change in the first reaction. Previous two months were solid and the first half of 2018 average was well above the 2011-2017 average (202 vs 175k). Moreover July has been statistically an above average month and a strong ADP (+219k) suggest a +200k reading. Improved pace of job creation can be a solid argument for the central bank that the economy can withstand higher interest rates.
July has been a solid month during this decade when it comes to employment growth. Source: Macrobond, XTB Research
The unemployment rate at 3.9% is already so low that the Fed is no longer worried about it and it will likely get overlooked in the report. What will not be overlooked is wage growth. It has improved somewhat but 2.7% y/y (May and June) is a bit weaker than sought after by the Fed. The consensus for this reading is 2.7% and we see a chance for a 2.8% print. However, markets may need even higher rate to really react strongly.
Wage growth remains moderate, a change for a pick up above 3% in months to come looks slim. Source: Macrobond, XTB Research
EURUSD on the charts
EURUSD consolidation is evident on the monthly chart as the pair was unable to make a decisive move for 2 months and drew spin candles in both June and July. A break of 1.1500 or 1.1860 is required to initiate the next directional move. One may see a potential head and shoulders formation but the right arm is missing. The left arm topped at nearly 1.21.
EURUSD could not decide in June and July. Will August see a breakout from the range? Source: xStation5
A H4 chart shows a narrower recent consolidation with a broad lower range below 1.16 and a much more precise resistance range around 1.1750. Since the pair dropped to 1.1620 as a consequence of the constructive FOMC statement, buyers must act quick if they do not want to lose this battle.
On a shorter time-frame we are closer to a lower limit in a 1.1570-1.1750 consolidation. Source: xStation5
Disclaimer
This article is provided for general information purposes only. Any opinions, analyses, prices or other content is provided for educational purposes and does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Any information provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.
Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk, we do not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
Daily summary: Weak US data drags markets down, precious metals under pressure again!
BREAKING: US RETAIL SALES BELOW EXPECTATIONS
Takaichi’s party wins elections in Japan – a return of debt concerns? 💰✂️
Three markets to watch next week (09.02.2026)
