In the month since the last jobs report in February, the dollar has weakened slightly despite an attempt higher. Economists were off in their forecasts last time around,  as February’s release was much stronger than expected. This month, analysts are predicting another robust employment report. Read on for expectations for this month’s data and forex trade signals for EUR/USD, GBP/USD, and USD/JPY.

What to expect from the April non-farm payroll data

Today’s release looks set to pick up where last month left off, with another strong number expected. Analysts expect that the total number of jobs added to the economy in February will be about 485,000, although it’s worth noting that forecasted figures have been substantially out more than a few times in the past 12 months.

Last month’s data came in higher than expected, at 678K, indicating the labour market is turning a corner. Over 75% of February’s job additions were in the service sector and as coronavirus restrictions subside, many parts of the economy hit hardest during lockdowns are now seeing growth accelerate. 

The Fed will be paying close attention to today’s data and the accompanying unemployment rate. Last week Jerome Powell said the U.S. central bank could take a more aggressive approach to hiking interest rates in an effort to control inflation and stronger data today could help sway the Fed into a 50 basis point rate hike at the next FOMC meeting. 

ADP non-farm employment change

Wednesday’s ADP data reported 455k jobs were added to the private sector in the past month. Health care, leisure, and hospitality saw the largest increases with nearly 300,000 jobs created in the three sectors, highlighting the reduction in coronavirus restrictions. The FX market had little reaction to the ADP figure and it came in exactly as forecast, which may signal today’s data could be lacklustre. 

How to trade the non-farm payroll data for April 2022

Traders will be monitoring how far above or below the payroll figure is compared to analyst expectations. A stronger than anticipated release will provide opportunities to sell some dollar crosses, while a weaker number could help time buys for USD crosses. Below are three forex trade idea’s ahead of today’s data release.

EURUSDSource: Tradingview

The early part of the week saw the Euro strengthen against the dollar with the pair rallying towards its monthly open, falling just short before pulling back during Thursday’s session. Depending on today’s data, there are two possible scenarios for the pair: a run higher to close the unfilled weekend gap from late Feb, or a drop lower to near term support.

Strong NFP data today would likely see USD strength kick back in and bearish targets of last week’s low at 1.0950 could be attainable. A weaker than expected jobs report may help the pair tick higher and a close of the weekly late February gap would be a strong contender as a target level.

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GBPUSDSource: Tradingview

The start of the March saw sterling drop against the dollar before finding support and bouncing at 1.3000. The market pulled back to the 70% fibonacci retracement level from last month’s high to low, before continuing its bearish drive lower. The pull back also resulted in a deviation above prior support at 1.3165, which it’s currently trading below. 

Similar to the EURUSD chart above, today’s data release could provide two possible trading scenarios. A bullish break above 1.3165 and higher could take place and would be accelerated by weaker than expected data. Trading to the downside would be preferred on a strong jobs report, with the first target at 1.3000.

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USDJPYSource: Tradingview

March was a bumper month for the dollar against the yen, with the pair rallying 1000 pips or 8.8% from its monthly open. This week has seen it starting to pull back however, which is to be expected after such a strong run. Looking at the pair on the 4 hour timeframe shows its price formed a channel which has had multiple taps on both its upper and lower levels. 

Early trading on Friday saw a solid break out of the channel to the upside with a run higher now looking likely. A strong jobs report today may give opportunities for longs, with a move back towards 125.00 in the coming days. Weak data could signal a move back to the channel, although it would be worth monitoring the channel high which could form a support level.

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