According to the Fxstreet team of analysts, non-farm payrolls are expected to increase by 185,000 in May, less than expected but higher than 175,000 in April, as more signs point to a cooling in the US labor market. The unemployment rate is expected to remain stable at 3.9% in May, while the monthly average hourly wage rate in May rose by 0.3% from the previous 0.2%, while the annual average hourly wage rate in May remained unchanged at 3.9%.
Generally speaking, strong economic data coupled with increased wage pressures will be interpreted as a further delay in rate cuts and lead to a stronger dollar. Conversely, a very disappointing report and loose wages may cause the dollar to fall faster as the market interprets it as a higher probability of a rate cut soon.
Valeria Bednarik, chief analyst at FXStreet, said: “Market participants seem willing to push EUR/USD higher, but still cannot make up their minds. It is obvious that the interest in buying the dollar is quite limited.”
He also pointed out: “From a technical point of view, EUR/USD needs to break through the 1.0910 area to extend gains, and before reaching 1.1000, it needs to face resistance around 1.0950. The bearish trend seems more difficult, and the downside seems more chaotic, with no clear breakout point before 1.0790. On the downside, EUR/USD may slide to 1.0700, but buying at the low seems risky and further declines seem unclear.”