Forex Analysis & Reviews: 07.02.2025 - Market on Pause: What to...

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07.02.2025 12:33 PM

Market on Pause: What to Expect from NFP and Its Impact on the Market?

U.S. stock futures decline on Friday as investors brace for the key jobs report, which could influence the Fed's next rate moves.

U.S. stock futures are retreating on Friday as investors hold their breath ahead of the highly anticipated Nonfarm Payrolls (NFP) report, which could shape expectations regarding the Fed's future monetary policy actions.

A slower pace of job growth in the U.S. may shift market dynamics, reinforcing expectations of a more dovish monetary stance. Forecasts suggest that the U.S. economy added 170,000 jobs in January, marking the weakest employment gain in three months, while the unemployment rate is expected to remain at 4.1%.

If the actual data falls short of expectations, this will strengthen hopes for early rate cuts, but at the same time, it may raise concerns about an economic slowdown.

The market has already felt the first signs of pressure—Amazon's stock dropped over 4% in pre-market trading following a weaker-than-expected revenue outlook for Q1, despite strong Q4 earnings. This put additional pressure on the Nasdaq 100, although the index still rose 0.51% on Thursday, while the S&P 500 gained 0.36%.

The financial, consumer, and tech sectors supported the market, while energy and healthcare stocks continued to weaken.

This week, Wall Street managed to recover some losses caused by Trump's unexpected tariff announcement, but current market movements remain cautious.

Nasdaq 100

At the time of analysis, the Nasdaq 100 was trading at 21,776, hovering near local resistance levels. The 21,800–21,850 zone is the key barrier for further upward movement.

If the jobs report triggers a positive market reaction, Nasdaq 100 could break through this resistance and aim for 22,000, which would become a profit-taking level for short-term traders.

However, the decline in the tech sector, driven by Amazon's weakness, may limit this upward momentum.

In case of weaker-than-expected NFP data, Nasdaq 100 could test support at 21,600. A break below this level would open the door for a deeper correction toward 21,400–21,300, an area of recent consolidation. The RSI (14) is near 60, indicating neutral market sentiment, while the MACD still signals an uptrend, but the bullish momentum is fading.

S&P 500

The S&P 500 is holding at 6,073, with its short-term trend hinging on the NFP report. The uptrend remains intact, but the index is approaching resistance in the 6,100–6,120 zone, where previous reversals occurred.

If the jobs data is weaker than expected (but not alarmingly so), S&P 500 could attempt to test 6,150. However, strong labor market data, which could increase the likelihood of prolonged high rates, may trigger a pullback toward 6,000–5,980.

Key support remains at 5,950. A break below this level would accelerate selling pressure, pushing the index toward 5,900

The RSI (14) is at 57, showing no overbought conditions yet, but the MACD indicates weakening bullish momentum.

Investors are bracing for volatility, and the next few hours will be crucial in determining the market's short-term trend.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.