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August 1, 2022

Best Setups For USD Before NFP

Frank Cabibi

The dollar is weaker today as the US is set to announce their seventh Non-Farm Payroll this year. Economists and investors alike anticipate this news to see whether the jobs market and output is going to come out with signs of retraction again. Here are some concepts followed by some of the best setups for USD pairs before Friday's NFP.

Expecting Contraction

The US expects to report yet another decline in output during this recessionary period. Forecasts say that the number of jobs added in the month of July will be 122K less than in June, marking the fifth contraction in a row.

best setups
USD GDP

Although monthly growth is exceeding analyst expectations, the rate is still slowing down. Investors should be keen not to be fooled by a beat in forecasts if GDP is still declining. On top of that, the unemployment rate is expected to increase as well by another 0.1%.

This could spell weakness for the dollar, even as interest rates rise. So, here are a few setups that we think are the best going into the week bearish or bullish.

Best Setups for USD

USD/JPY

best setups

UJ continues to slide on a strong yen as the BOJ decided that no intervention was required to find economic growth. The overall trend is still on the upside for the most part, but signs of a shift in momentum just happened on the 1D timeframe. Price broke under a long term trend line and is headed toward support around 131.407. Additional support doesn't look clear until the 125.100s-126.300s.

NZD/USD

best setups

NZDUSD shoots higher on the day as the dollar sinks from weak outlook. Price has already broken above a falling trend line and is pushing towards resistance around 0.63918. Further resistance lies above around 0.65505 should price break higher.

GBP/USD

best setups

GU inches toward resistance around 1.23300s. Its correlation to the US stock market has reflected price action and will likely continue its trend upward until the SPX500 turns the other way. Up until NFP, the pair may rise higher towards 1.233 and 1.244 which is another level higher. It is unclear whether or not the bear market has ended, but price looks like it will continue to rise going into Friday's report.

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