EUR/USD: Trading the US NFP Aug 2016

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.

The indicator fell sharply in June, coming in at 223 thousand. This was short of the forecast of 231 thousand, and has raised some uncertainty about when the Fed will raise interest rates. The forecast for the July reading stands at 220 thousand. Will the indicator rebound and beat the prediction?

 

Sentiments and levels

The Greek crisis has receded, after plenty of drama and high-stake poker playing. This is good news for the euro,  but Greece’s debt isn’t going  to disappear,  so tough decisions will have to be made at  a later date. Over in the US, better numbers in Q2 are feeding rising speculation that US rates will rise, perhaps as early as September. So, the overall sentiment is  neutral on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1290, 1.1190, 1.1050, 1.0865, 1.0815 and 1.0760.

5 Scenarios

1. Within expectations: 217K to 223K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
2. Above expectations: 224K to 227K: An unexpected higher reading could send the pair below one support line.
3. Well above expectations: Above 227K: Such an outcome would  likely prop up the pair, and a second support line could fall as a result.
4. Below expectations:  213K to 216K: A  weaker reading  than forecast could result in EUR/USD pushing above one line of resistance.
5. Well below expectations: Below 213K. In this scenario, the pair could  break above a second resistance line.

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

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