EUR/USD: Trading the US Non Farm Payrolls Oct 2014

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.

News: Non-Farm Payrolls 248K – USD higher

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

Published on Friday at 12:30 GMT.

Update: Did Bullard hint of an excellent NFP report? and also Obama seemed very optimistic about the economy.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. The release of US Non-Farm Employment Change is highly anticipated by the markets, and an unexpected reading can affect the direction of EUR/USD.

Nonfarm Employment Change had a poor performance last month, dropping to 142 thousand, compared to 209 thousand in the previous release. The markets are expecting a strong rebound in the upcoming release, with an estimate of 216 thousand.

Sentiment and Levels

The euro remains under siege from the surging US dollar, and the monetary policy convergence is clear and intensifying. The Eurozone continues to grapple with no growth, rock bottom inflation, and even the promised ABS may not make a noticeable difference. On the other side of the Atlantic, a bounce back from last month’s weak NFP can meet the markets when expectations are low, thus providing another reason for the dollar to rally, as it seems unstoppable. The ECB has to be pleased with the euro’s sharp descent, but will probably feel comfortable only around 1.20-1.25 .So, the overall sentiment remains bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.2750, 1.27, 1.2660, 1.2590, 1.25 and 1.2445.

5 Scenarios

  1. Within expectations: 212K to 220K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 221K to 226K: An unexpected higher reading could send the pair below one support line.
  3. Well above expectations: Above 226K: The chances of such a scenario are low. Such an outcome could push the pair lower, and two or more support lines could fall as a result.
  4. Below expectations: 206K to 211K: A better reading than forecast could result in EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 206K. In this scenario, the pair could break through two or more resistance lines.

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

To follow this event live: 

Powered by FXstreet.com
Get the 5 most predictable currency pairs

Leave a Reply

Your email address will not be published. Required fields are marked *