German Unemployment Change indicator, released monthly, is an important leading indicator which often has a significant impact on the markets. Employment figures are important as they provide a snapshot of the health of the economy. A reading which is higher than the market forecast is bearish for the euro.
Here are the details and 5 possible outcomes for EUR/USD.
Published on Thursday at 7:55 GMT.
Indicator Background
Job creation is one of the most important leading indicators of overall economic activity. The releases of the Unemployment Change should be treated as a market-mover which can affect the movement of EUR/USD.
Unemployment Change faltered in the May reading, jumping to 21 thousand claims. This was well above the estimate of 4 thousand. The markets are anticipating a much stronger release this time around, with an estimate of 7 thousand. Will the indicator meet or beat this prediction?
Sentiment and Levels
The US dollar has been broadly stronger since the Fed said its word and has posted strong gains against the euro. While we’ve seen some retracting by some Fed policymakers regarding QE, the US dollar is expected to remain bid. If no disaster happens with the US economy, the next move in the US is likely a reduction of the pace of monetary stimulus rather than an increase.
Recent Eurozone numbers have not impressed and more monetary stimulus cannot be ruled out. Current expectations for the July rate decision are for no big changes. If we continue to get weak indicators or dovish talk, the euro could tumble lower. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels from top to bottom: 1.32, 1.3160, 1.31, 1.3050, 1.30 and 1.2940.
5 Scenarios
- Within expectations: 4K to 10K: In this scenario, EUR/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
- Above expectations: 11K to 14K: A weak reading could push the pair below one support level.
- Well above expectations: Above 14K: A sharp rise in unemployment numbers could push EUR/USD down, and two or more support lines could fall.
- Below expectations: 0K to 3K: A lower than expected reading could propped the euro higher, with one resistance line at risk.
- Well below expectations: Below 0K: A reading in negative territory could see EUR/USD break two or more lines of resistance.
For more on the euro, see the EUR/USD.
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