This week's JOLTS job openings data showed a much larger-than-expected decline in the number of vacancies. This has fueled speculation among some market participants that labor market conditions in the U.S. could deteriorate, potentially pushing the Federal Reserve to resume interest rate cuts later this year.

Against this backdrop, coupled with Donald Trump's aggressive start to his presidency, uncertainty surrounding the economic outlook and U.S. geopolitical influence continues to unsettle financial markets. The ongoing trade standoff between China and the U.S. remains the dominant market-moving factor, influencing global trade relations and significantly impacting commodity prices, stock markets, and U.S. dollar-linked currency pairs.

While geopolitical tensions from the U.S. administration are keeping investors on edge, today's Nonfarm Payrolls (NFP) report for January will take center stage. This release precedes the upcoming inflation report, which could have a significant impact on market sentiment.

U.S. Jobs Report Forecasts and Market Expectations

According to the consensus forecast, the U.S. economy was expected to add 169,000 jobs in January, down from 256,000 in December. The unemployment rate is projected to remain steady at 4.1%, while average hourly earnings growth is expected to stay at 0.3% month-over-month, with a slight year-over-year slowdown to 3.8% from 3.9%.

How Will Markets React to This Key Economic Data?

The U.S. dollar's reaction to the jobs report could be significant, much like it was on Wednesday when ADP employment data was released. The greenback may receive limited support on Forex markets if the NFP figure exceeds 169,000 and wage growth accelerates. However, uncertainty over Trump's economic and geopolitical policies could cap any potential dollar rally.

On the other hand, a weaker-than-expected jobs report could trigger a sharp dollar selloff, as markets are already pricing in two potential Fed rate cuts this year.

Given the uncertainty surrounding today's jobs report, traders should adjust their strategies based on the actual data release.

Daily Forecast: Key Levels to Watch

EUR/USD

The pair is trading below the 1.0400 resistance level. Stronger-than-expected U.S. jobs data could push the pair down to 1.0300. Weaker-than-expected data could trigger a rally toward 1.0470.

GBP/USD

The pair is holding below the 1.2470 resistance level ahead of the NFP report. A strong NFP reading could drive GBP/USD down to 1.2350. A disappointing report may send the pair higher, breaking resistance at 1.2470 and targeting 1.2580.