EUR/USD: Trading the US NFP February 2013 outlook

US Non-Farm Employment Change measures the change in the number of newly employed people in the US, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.

Here are the details and 5 possible outcomes for EUR/USD.

Published on Friday at 13:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus, the publication of employment data is highly anticipated by the markets, and an unexpected reading could affect the direction of EUR/USD.

In December, Non-Farm Employment Change climbed to 155 thousand, slightly above the estimate of 150 thousand. The markets are anticipating another rise this month, with an estimate of 161 thousand. Will the indicator meet or beat the forecast in the upcoming release?

Sentiment and Levels

The growing talk about currency wars from Europe could weigh on the euro – also Europe prefers a weaker currency, not only Japan. In addition, the economic situation in Europe remains problematic, and we’ll see it once again with the unemployment numbers. On the other hand, lower bond yields and signs that Germany is still strong support the euro, but not enough. The Federal Reserve maintained the course, so their announcement of more of the same will likely not impact on the pair. So, the sentiment is neutral on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3838, 1.3780, 1.36, 1.3480, 1.34 and 1.3360.

Update: EUR/USD Breaks Above Uptrend Resistance Ahead of NFP

5 Scenarios

1. Within expectations: 154K to 168K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 169K to 176K: An unexpected higher reading can send the pair below one support line.
3. Well above expectations: Above 176K: The chances of such a scenario are low. Such an outcome would be bullish for the dollar, and a second support line could fall as a result.
4. Below expectations: 146K to 153K: A smaller increase than forecast could result in EUR/USD breaking above one line of resistance.
5. Well below expectations: Below 146K. In this scenario, the pair could move above a second resistance line.

For more about the euro, see the EUR/USD.

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