EUR/USD: Trading the US NFP Aug 2014


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.

Update: Non-Farm Payrolls +209K, unemployment rate 6.2%- USD falls

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.

In May, Nonfarm Payrolls was excellent, climbing to 288 thousand. This easily beat the estimate of 214 thousand. The markets are bracing for a soft reading for June, with the estimate at just 230 thousand. So we could see a repeat of the ADP Nonfarm Payrolls report, which weakened last month.

Sentiment and Levels

With inflation numbers coming out of the euro-zone, we will probably get a stark reminder of why the ECB is in an ultra-easing policy, and that’s here to stay, especially as German business confidence slides and France is still lagging behind. In the US, a sparkling GDP will add pressure on the Fed to tighten interest rates. Recent data is quite encouraging. The “buy the dips” mode that characterized the pair’s trading for a long time seems to have vanished: bad news sticks. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.35, 1.3450, 1.34, 1.3335, 1.3295 and 1.32.

More: EUR/USD and USD/JPY pre NFP Elliott Wave Analysis

5 Scenarios

  1. Within expectations: 225K to 235K. In such a scenario, the EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 236K to 248K: An unexpected higher reading could send the pair below one support line.
  3. Well above expectations: Above 248K: The chances of such a scenario are low. Such an outcome could prop up the pair, and a second support line could fall as a result.
  4. Below expectations: 212K to 224K: A weaker reading than forecast could result in EUR/USD pushing above one line of resistance.
  5. Well below expectations: Below 212K. 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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About Author

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.

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