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NFP Results Likely To Be A Deciding Factor On USD Direction In Coming Months

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Post Election Traders Are Looking To NFP Data For USD Direction

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The Breakdown

As Covid-19 wreaked havoc globally earlier this year, the US economy saw a loss of nearly 22 million jobs, a devastating blow to the US economy. Since the Covid stock market lows the US economy has recovered significantly, recovering around 12 million jobs, leaving a net loss of 10M jobs. With recent uncertainty regarding the US election the USD had a lack of certain direction, however now it seems that NFP data will likely become a major factor on USD direction.

Analysts at Wells Fargo have announced NFP expectations below the market consensus, with a growth of 425K jobs rather than 500K. This would very likely result in a USD sell off.
Analysts also cited avoiding NFP negative numbers for the next several months would be helpful in providing an employment bump post vaccine.

Looking at the US dollar index (DXY) on the weekly chart it appears that the USD is still on the backfoot, having broken and held below the January lows. The resistance trendline still holds price down, with price having rejected upside off of it a few weeks ago. The 21, 50, 100 and 200 moving averages all lie well above, not a positive technical sign for USD Bulls.

For a number of weeks now we have held a USD bearish bias, and are looking for continued opportunities to exploit the bearish trend.

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