EUR/USD: Trading the US Non-Farm Payrolls

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 improved sharply in January, jumping to 242 thousand. This crushed the estimate of 195 thousand. The markets are expecting a softer reading in February, with an estimate of 206 thousand.

Sentiment and Levels

EUR/USD has taken advantage of a very dovish speech from Janet Yellen this week, in which she all but ruled out an April rate hike. Still, the US economy is doing well, and ADP Nonfarm Payrolls beat the estimate, which could be a harbinger of a strong Nonfarm Payrolls reading. So, the overall sentiment is neutral on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1460, 1.1373, 1.13, 1.1220 and 1.1140

5 Scenarios

  1. Within expectations: 201K to 211K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 212K to 217K: An unexpected higher reading could push the pair below one support line.
  3. Well above expectations: Above 217K: Such an outcome could push the pair lower and two or more support lines could fall as a result.
  4. Below expectations: 195K to 200K: A weaker reading than forecast could result in EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 195K. In this scenario, the pair could break through 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Your email address will not be published.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 *