At this point, we all know that labour market conditions are still fairly solid in the US. It's been a while since the jobs report has been a key catalyst for market moves but amid the backdrop of slower inflation, this could be one where we see added volatility in the aftermath - that is if the numbers are softer.
In that sense, it will perhaps give more reason for the Fed to slow down the pace of rate hikes i.e. another coin in the Fed pivot piggy bank. Essentially, we're still at the stage when bad news is good news for broader market sentiment. And that would bode ill for the dollar, especially since the technicals are looking rather poor for the greenback going into the report. Let's take a look.
The push higher in EUR/USD this week sees the pair move to a five-month high, clearing its 200-day moving average and resistance just under 1.0500. The pair is little changed today but unless sellers can push price back below 1.0500 and preferably the 200-day moving average - now seen at 1.0365, buyers are still looking fairly poised to try and take a run at key trendline resistance (white line) near 1.0630.
Over to GBP/USD, the pair has broken above its 200-day moving average (blue line) and is trading above both its key daily moving averages for the first time since July last year. That's a big signal that buyers are coming up for air and we are now meeting some minor resistance from the August highs at 1.2276-93. Beyond that, the 1.2500 mark is on the cards as the upside leg looks to exert itself further.
For sellers, they have much work to do in bringing the pair down back under the 200-day moving average - now seen at 1.2146 - to convince of a turnaround now.
USD/JPY is also one that is making waves today, with the pair down nearly 1% to just below 134.00 currently. The low earlier hit 133.64 as the downside pressure persists, but a lot will hinge on bond market developments for the next move.
That said, sellers are now taking price below its 200-day moving average (blue line) of 134.49 and that is a big level to break as the pair last only traded below both key daily moving averages in January 2021. In other words, it's a massive swing in momentum that could lend itself to further downside pressure.
Meanwhile, AUD/USD is also finding itself in a good spot after breaching resistance from the 61.8 Fib retracement level at 0.6767 this week. Buyers are continuing to keep the momentum as price now has room to extend towards its 200-day moving average (blue line) next at 0.6922.
For sellers, there is plenty of work to be done - first in bringing the pair back under the broken resistance this week at 0.6767 and then needing to solidify a downside push back under the 100-day moving average (red line) at 0.6686 to really convince of any reversal i nthe momentum.
NZD/USD is also another pair that is looking for a stronger breakout, after pushing back above its 200-day moving average (blue line) this week. The momentum is clearly siding with buyers now as they are targeting a push towards the August high at 0.6468.
For sellers, there is much work to be done as they need to claw their way back in bringing price towards the 200-day moving average - now seen at 0.6286.
Summary: As you can see from the charts, there is plenty of work to be done on the part of dollar bulls at the moment. There aren't much levels to even lean on and the best they can hope for is some other catalyst to drive price action in their favour. However, it's tough to imagine the US non-farm payrolls as being that considering that the risks to the report are skewed in favour of dollar sellers instead - coming off the back of stronger momentum with a softer US inflation report last month and then Fed chair Powell's less hawkish remarks earlier this week.