EUR/USD: Trading the US Non-Farm Employment Change Mar 2013

US Non-Farm 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. Thus, the publication of employment data is highly anticipated by the markets, and an unexpected reading could affect the direction of EUR/USD.

In February, Non-Farm Employment Change came was largely unchanged, coming in at 157 thousand. This fell below the estimate of 161 thousand. The estimate remains pegged at 161 thousand for the upcoming release. Will the indicator meet or beat the forecast?

Sentiment and Levels

While the Italian political mess could now be priced in, the troubles for the euro are far from over. The next sell-off could be now triggered by Mario Draghi. With a deep recession, rising unemployment and even low inflation (what the German Bundesbank eyes) the ECB now has more room to cut the rates.  The ECB will likely leave rate levels at their current levels.  However, even a hint of a rate cut has the potential to push the euro lower. In the US,  recent data has been positive, so the  recovery  may finally be taking hold.  So, the overall sentiment  is bearish  on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3130, 1.3100, 1.3030, 1.30, 1.2960 and 1.2880.

5 Scenarios

1. Within expectations: 151K to 171K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 172K to 182K: An unexpected higher reading can send the pair below one support line.
3. Well above expectations: Above 182K: The chances of such a scenario are low. Such an outcome would prop up the pair, and a second support line could fall as a result.
4. Below expectations:  140K to 150K: A  weak release  could result in EUR/USD pushing above one line of resistance.
5. Well below expectations: Below 140K. In this scenario, the pair could move above a second resistance line.

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

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