All attention from EUR/USD traders is currently focused on the conflict in the Middle East. Loud statements from Trump and equally loud pronouncements from Iranian authorities have a strong impact on the pair. On Wednesday, buyers tested the 1.1600 area, while on Thursday, sellers approached the boundaries of the 1.1400 price level. Macroeconomic reports here play a secondary, supporting role. For example, the ISM manufacturing index on Wednesday provided additional support for the dollar, reaching a nearly four-year high. However, this release only complemented the fundamental picture—the main driver has been geopolitics.

It is important to note that on Friday, April 3, key labor market data for March will be published in the US. This is a crucial report that could provoke significant volatility in the EUR/USD pair, especially if the actual results deviate substantially from the forecasts. In such a case, how much can the Non-Farms be trusted in the context of opening long/short positions? Can a poor NFP report "outweigh" the geopolitical agenda?

According to preliminary forecasts, the US unemployment rate is expected to remain at the February level of 4.4%. By some other estimates, the unemployment rate should rise again in March—this time to 4.5%. Meanwhile, the number of people employed in the non-farm sector is expected to increase by only 56,000 in March. Such a weak result could be interpreted favorably for the American currency, given the poor data from February. Recall that the number of employed then decreased by 90,000, largely due to adverse weather conditions.

In February, hiring was hindered by severe cold weather. Warmer weather in March has, in particular, facilitated the return of jobs in the construction sector. Additionally, unlike in February, American healthcare workers are not on strike. The cessation of strikes in the healthcare sector, which negatively impacted the February report, could add approximately 30,000 to the total NFP figure.

The average hourly wage is expected to increase by 0.4% month-over-month after a rise of 0.3% in the previous month. Year over year, this figure is also expected to accelerate from 3.8% to 4.1%. Formally, such a result could support the greenback, but here everything will depend on the dynamics of the other components of the report. After all, accelerating wage growth amid weak hiring is one of the signs of stagflationary pressure.

However, the market will primarily monitor the employment dynamics. If the NFP comes in at the forecast level (around 55,000-60,000), the US currency will receive only minor, background support, with the understanding that the February decline was indeed due to extraordinary circumstances. The market will view the forecasted result as a sign of stabilization after the one-off decline in the previous month.

If the Non-Farms come in at a significantly higher level than expected (i.e., above 80,000), the dollar will gain substantial support, as such a result would definitively remove the rate cut from the agenda in the near future.

However, if the employment indicator shows a weak result (i.e., falls below 40,000), the dollar could come under significant pressure in the moment, allowing EUR/USD buyers to stage an upward rebound. In such a case, fears of a US recession will intensify, with all the consequences that follow. Additionally, aside from the headline NFP figures, the U-6 unemployment rate (broad unemployment) will also be important, having fallen to 7.9% in February. If it rises alongside the main unemployment figure, it will signal a cooling labor market.

Nevertheless, regardless of how the March Non-Farms turn out, their influence on EUR/USD dynamics is likely to be short-lived, as the trading tone will still be set by geopolitics.

Looking at the weekly chart of EUR/USD, we see that traders are impulsively and emotionally reacting to Trump's contradictory statements, then returning to the area of 1.1500. Buyers are unable to establish themselves above the target of 1.1600, while sellers are also unable to settle below 1.1500. Therefore, if the NFP report provokes an impulsive price movement in either direction, it is advisable to consider opening positions aiming to return the pair to the area of 1.1500. Despite its significance, March Non-Farms will likely not "outweigh" the influence of the geopolitical agenda, meaning they will not set the trend for the pair. At the same time, the contradictory signals from geopolitics continue to "hold" the pair within the 1.1500 range.