US Unemployment Claims is released weekly, and measures the number of people filing for unemployment for the first time. It is considered an important measure of the health and direction of the US economy. A reading which is higher than the market forecast is bullish for the euro.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Thursday at 13:30 GMT.
Indicator Background
Analysts closely monitor employment data, and Unemployment Claims provides them the opportunity to track the US employment picture on a weekly basis. The labor market is highly correlated with economic growth, so an unexpected reading can have a significant impact on the movement of EUR/USD.
Unemployment Claims is on a downward trend, and the indicator dropped to 268 thousand last week, well below the estimate of 286 thousand. However, the markets are braced for a strong jump in the upcoming reading, with the estimate standing at 283 thousand. Will the indicator again surprise the markets and beat the prediction?
Sentiments and levels
EUR/USD remains in correction mode and appears to have found a range to trade in: between 1.0710 and 1.1050. While the greenback has been less attractive recently, the euro is not an attractive alternative. Economic data has improved slightly in the Eurozone, but the economy remains fragile. Draghi and co. will continue printing money to give the economy a stronger footing, but the road to recovery will be a bumpy one. So, the overall sentiment is neutral on EUR/USD towards this release.
Technical levels, from top to bottom: 1.12, 1.1050, 1.0910, 1.0760, 1.0615 and 1.0550.
5 Scenarios
- Within expectations: 279K to 287K: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 288K to 292K: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 293K: A sharp increase in unemployment claims would be bearish for the dollar. Two or more resistance lines could be broken on such an outcome.
- Below expectations: 274K to 278K: A positive reading could push EUR/USD lower, and one support line could be broken.
- Well below expectations: Below 274K. A sharp decrease in unemployment claims could see the pair break below two or more support levels.
For more on the Euro, see the EUR/USD forecast.
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