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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 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 could affect the direction of EUR/USD.

Non-Farm Employment Change has been moving higher throughout 2014, and hit 288 thousand in the April reading. This easily surpassed the estimate of 216 thousand. However, the markets are braced for a sharp downturn, with the May estimate standing at 212 thousand. Will the indicator again surprise the markets and beat the prediction?

Sentiment and Levels

All eyes are on the ECB, which is expected to take some action at its policy meeting on Thursday. A negative deposit  rate from a major central bank is uncharted territory and can have a strong negative impact on the euro, even if does not come as a surprise. In addition, Draghi is likely to maintain the dovish stance and leave the door open for more action, aiming for a lower exchange rate. Together with not-so-cheap European bonds, we could see outflows from the euro-area.

In the US,  market sentiment remains positive, although that could change if  Unemployment Claims and Nonfarm Payrolls miss expectations.  The top tier  US data may impact  the US dollar against most currencies in either direction, but is probably going to leave the most of the stage to Draghi’s heavy hand.  So, the overall sentiment is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.3740, 1.37, 1.3650, 1.3615, 1.3560 and 1.3515.

5 Scenarios

  1. Within expectations: 207K to 217K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
  2. Above expectations: 218K to 226K: An unexpected higher reading could send the pair below one support line.
  3. Well above expectations: Above 226K: Such an outcome could  prop up the pair, and a second support line could fall as a result.
  4. Below expectations:  198K to 206K: A  weaker reading  than forecast could result in EUR/USD pushing above one line of resistance.
  5. Well below expectations: Below 198K. 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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