EUR/USD: Trading the US Nonfarm Employment Change

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.

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 have a substantial impact on the direction of EUR/USD.

Nonfarm Employment Change surged in the June report, climbing to 287 thousand. This is easily beat the estimate of 175 thousand. The estimate for the July report stands at 180 thousand.

Sentiment and Levels

Eurozone growth has been lukewarm and inflation remains an issue, although recent inflation numbers have shown improvement. However, the weak GDP data from the US could result in the Fed staying on the sidelines until December or even later. All in all, things could remain balanced. So, the overall sentiment is neutral on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1335, 1.1230, 1.1190, 1.10, 1.0905 and 1.0825

5 Scenarios

  1. Within expectations: 177K to 183K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 184K to 188K: An unexpected higher reading could push the pair below one support line.
  3. Well above expectations: Above 188K: Such an outcome could push the pair lower and two or more support lines could fall as a result.
  4. Below expectations: 172K to 176K: A weak reading could result in EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 172K. A very soft reading could result in the pair breaking above two or more resistance lines.

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

Get the 5 most predictable currency pairs

Leave a Reply

Your email address will not be published.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