US Nonfarm 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.
Update: Non-Farm Payrolls: +280K – USD surges
Published on Friday at 12:30 GMT.
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.
After a dismal reading in March, Employment Change rebounded in April with a reading of 223 thousand. This was a bit short of the forecast of 228 thousand. Little change is expected in the May report, with the estimate standing at 226 thousand.
Sentiment and Levels
The euro has shown some life to start the month of June, but the relief may be only temporary for the common currency, which has struggled badly against the US dollar. We will probably get another reminder to the main driver of the pair down: monetary policy divergence, with a strong message from the ECB. The ongoing crisis in Greece continues to percolate and the uncertainty is not good news for the euro. In the US, data is improving, and the dollar has enjoyed broad strength as a result. So, the overall sentiment remains bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1450, 1.1373, 1.1290, 1.12, 1.1113 and 1.1050.
5 Scenarios
- Within expectations: 223K to 229K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 230K to 234K: An unexpected higher reading could send the pair below one support line.
- Well above expectations: Above 234K: 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.
- Below expectations: 218K to 222K: A weaker reading than forecast could result in EUR/USD breaking above one resistance line.
- Well below expectations: Below 218K. In this scenario, the pair could break through two or more resistance lines.
For more about the euro, see the EUR/USD.
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