EUR/USD: Trading the US NFP Dec 2015

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 13:30 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.

Nonfarm Employment Change was outstanding in October, jumping to 271 thousand. This crushed the estimate of 181 thousand. The markets are expecting a sharp drop in November, with the forecast standing at 201 thousand. Will the indicator repeat and beat the estimate?

Sentiment and Levels

Draghi has a tendency to surprise the markets, and the ECB is expected to announce additional monetary easing later on Thursday. This could lead to a further drop towards parity. Continuing speculation that the Fed will raise rates later in the month continues to bolster the dollar. So, the overall sentiment remains bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.0710, 1.0630, 1.0566, 1.0530, 1.0460 and 1.03.

5 Scenarios

  1. Within expectations: 196K to 205K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 206K to 212K: An unexpected higher reading could send the pair below one support line.
  3. Well above expectations: Above 212K: 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.
  4. Below expectations: 189K to 195K: A weaker reading than forecast could result in EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 189K. 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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