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The economic calendar is packed with influential data announcements this week which are likely to provide volatile conditions and exciting opportunities for currency traders. The headline data release is the Non-Farm Payrolls (NFP) employment announcement from the US on Friday, considered the most influential market mover, accompanied by the latest unemployment rate.

The jobs data has disappointed the market in recent months and the April release has become even more critical than usual. Should the figure be announced as less than the forecast 203,000, then this will indicate the economy’s recovery is not as robust as Federal Chairwoman Janet Yellen would have us believe. If it is particularly disappointing, Yellen may even be forced to reconsider the current rate of tapering monthly asset purchases. On the other hand, if the figure is over 250,000 this could really excite the market, boost USD and vindicate Yellen’s decision to reduce the level of quantitative easing.

More: the long term direction of the US dollar

In a rare occurrence, the Federal Reserve is also meeting this week to decide this month’s interest rate decision. The two day meeting on Tuesday and Wednesday is not expected to elicit any surprises; Yellen is expected to announce interest rates stay steady at 0.25% and that the tapering program will continue at the current rate of $10 billion per month. EUR/USD closed on Friday at 1.3826 and was trading steady in early trading this week at 1.3820. The EUR/USD pivot point is 1.3860, with resistance levels at 1.3883, 1.3899 and 1.3922, and support levels at 1.3844, 1.3821 and 1.3805.

The main Eurozone focus this week will be the flash estimate CPI which is due on Wednesday. Inflation is a hot topic with many analysts concerned that the Eurozone is at risk of deflation. This week’s data is expected to be 0.8% which will be cheering news for the ECB and may give them the green light to hold off on intervening in the market for the time being. However, should there be a surprise drop in the inflation data, this may finally force the ECB into action. The euro may also react to Tuesday’s Gfk German Consumer Climate Index which is an indicator of consumer confidence, and Friday’s German Manufacturing PMI. The latter is particularly important as Germany is the manufacturing powerhouse of the Eurozone and any big changes to German PMI can have a big impact on the strength of the euro.

For more, see the EUR/dollar prediction

Sterling continues to be the success story of the year with the UK economy showing signs of a steady and robust recovery; Tuesday’s preliminary GDP reading may well boost GBP further if the expected growth rate of 0.9% proves to be a reality. Further GBP activity is expected on Thursday when both manufacturing and construction PMI are both expected to show positive readings further indicating the sustainability of the UK recovery. The GBP/USD pivot point is 1.6840, with resistance levels at 1.6856, 1.6868 and 1.6884, and support levels at 1.6828, 1.6812 and 1.6800.

See how to trade the UK GDP with Pound dollar

Demand for the Japanese yen has been limited in early trading in advance of the latest Bank of Japan meeting scheduled for Wednesday this week. BoJ Governor Kuroda is expected to give the first indication of the impact of the rise in sales tax that was introduced this month, with Bloomberg reporting that analysts are expecting Japan to add monetary easing by July to try and boost the flagging economy. The USD/JPY pivot point is 102.21, with resistance levels at 10.24, 102.27 and 102.30, and support levels at 102.18, 102.15 and 102.12.

The Asian markets are also expected to be affected by the announcement of China’s manufacturing PMI on Thursday. This figure has been hovering close to 50, which is the point which separates growth from contraction. The latest reading is forecast to be 50.5, but if it comes out even lower this could put a lot of pressure on China’s trading partners, particularly Australia. AUD traders should closely monitor this announcement and be prepared for volatility. The AUD/USD pivot point is 0.9293, with resistance levels at 0.9302, 0.9308 and 0.9317, and support levels at 0.9287, 0.9278 and 0.9272.

Guest post by Forex Time

What to Watch this Week

Forex traders are spoiled for choice this week, with the main focus being USD pairs, particularly EUR/USD, during the NFP announcement on Friday. GBP/USD may also be an interesting pair to watch on Thursday when the PMI data is released, and USD/JPY on Wednesday.