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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.

Update:  Non-Farm Payrolls amazes with +321K – USD leaps

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.

Non-farm Employment Change dropped sharply in October, falling to 214 thousand. This was well short of the forecast of 235 thousand. The markets are expecting a strong turnaround, with an estimate of 231 thousand. Will the indicator meet or beat the estimate?

Sentiment and Levels

Although last week’s US indicators leaned  mostly downwards, allowing  EUR/USD to recover, market sentiment remains positive  towards the US, which  is still on a steady track to rate tightening.  In the Eurozone, growth levels and inflation have not picked up, despite efforts by the ECB to boost the economy.  This ECB meeting is more special, as it features forecasts. Draghi said that more action is to be taken if forecasts deteriorate, but the markets  are not bullish on Draghi’s ability to have an impact on the Eurozone malaise, but he certainly is capable  of pushing down the euro with some pessimistic forecasts about the Eurozone economy. Europe needs a  weaker euro as an urgent Christmas present for boosting inflation and exports and Draghi certainly knows how to deliver.  So, the overall sentiment  remains  bearish on EUR/USD towards this release.

 

Technical levels, from top to bottom: 1.2440, 1.24, 1.2360, 1.2250, 1.2170 and  1.2040

5 Scenarios

  1. Within expectations: 227K 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 241K: An unexpected higher reading could send the pair  below one support  line.
  3. Well above expectations: Above 241K: Such an outcome could  push the pair lower, and two or more  support lines could  fall as a result.
  4. Below expectations:  221K to 226K: A  better reading  than forecast could result in EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 221K. This is an unlikely scenario. In such a case, the pair could break through two or more resistance lines.

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

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