NFP Preview: Jobs May Improve, Iran Still Drives Markets

Markets expect the March NFP report to show about 65K new jobs, 0.3% monthly wage growth, and unemployment at 4.4%.Even so, Middle East tensions and the risk of a continued closure of the Strait of Hormuz are currently the main drivers of markets. Because of this, geopolitical developments may have a bigger impact on the US dollar than the jobs data unless there is a large surprise.

With inflation still above the Federal Reserve’s 2% target, markets now see about an 80% chance the Fed will not cut interest rates this year.

Technically, the US Dollar Index is trending inside an uptrending channel from late January. Price is testing strong resistance near 100.44 (high of 31st march). A break above this level could push it toward 101.50 area or even further, especially if the jobs report is strong or tensions rise further. A weak report or signs of progress toward peace with Iran could pull it back toward 99.00 to 98.65 area.

DXY Daily Chart

Overall, a modest improvement in jobs is expected, but Iran remains the key factor, and traders are likely to keep buying US dollar dips while tensions stay high.