Home EUR/USD: Trading the US Unemployment Claims

EUR/USD: Trading the US Unemployment Claims

The US Unemployment Claims indicator is published weekly, and measures the number of people filing for  unemployment for the first time. A reading which is higher than the market forecast is bearish for the dollar.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Thursday at 13:30 GMT.

Indicator Background

Unemployment claims is an important economic indicator of consumer confidence in the economy. It helps measure future spending behavior, as consumers are more likely to spend if they are confident that their jobs are secure and unemployment is stable or dropping. In turn, an increase in consumer spending sends a strong signal that the economy is healthy and growing.

Earlier in January, the indicator recorded its best reading in over three years, at 352K. However, last week’s reading was up to 377K, slightly higher than the market forecast. The prediction for this week calls for little change, with a forecast of 373K. These higher unemplyment numbers may signal that the recent improvement in the US economy has tapered off slightly, and the dollar could lose some ground as a result.

Sentiments and levels

The Euro has  had a huge rally against the dollar, but the eurozone crisis could  worsen and dampen  the  continental currency. On the other hand, the Federal Reserve’s statement about  maintaining low interests rates  makes the dollar less attractive to investors.  So, the overall sentiment is neutral on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3330, 1.3280, 1.3145, 1.3085, 1.30, 1.2945 and 1.2873.

5 Scenarios

  1. Within expectations: 363K to 383K : In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 352K to 362K: An unexpected lower reading can send the pair below one support level.
  3. Well above expectations: Below 352K:   Two or more support lines  could be broken  on such an outcome.
  4. Below expectations:384K to 394K: A poor reading could push EUR/USD higher, and one resistance line could be broken.
  5. Well below expectations: Above 394K. A sharp increase in the reading will hurt the dollar, and the pair could break two or more resistance levels.

For more on the Euro, see the EUR/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.