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US Non-Farm Employment Change measures the change in the number of employed people in the US, excluding workers in the farming industry. This indicator is released one day after the ADP Non-farm payrolls, which is an unofficial release. 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  13:30 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus publication of employment data, such as the Non-Farm Employment Change, is highly anticipated by the markets. Due to its importance, an unexpected reading can affect the movement of EUR/USD.

In December, the indicator fell to 146 thousand, but this was much higher than the forecast of 86K. The markets are anticipating a  stronger  January reading, with a forecast of 135K.  Will the indicator repeat and beat the market forecast this month?

Sentiment and Levels

The euro looked sharp following the fiscal cliff agreement, but has since dropped sharply, and  the  pair continues to fluctuate.  Will the downtrend continue or can the euro regain its footing?    The euro could get a boost from  the many positive signs  evident in  the US economy, which  certainly help the “risk on” environment – dollar selling, as seen throughout most of the post financial crisis period. So, the sentiment is neutral on EUR/USD towards this release.

Technical levels from top to bottom: 1.3170, 1.3130, 1.3110, 1.3030,  1,30 and 1.2960.

5 Scenarios

  1. Within expectations: 129K to 141K: In this scenario, EUR/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 142K to 148K: A reading above expectations would signal economic expansion, and could push the pair  below one  support level.
  3. Well above expectations: Above 148K: A sharp rise in employment numbers could propel EUR/USD upwards, and two  or more support levels  could be broken.
  4. Below expectations: 122K to 128K: A weak reading could pull the pair downwards, with one  line of resistance  at risk.
  5. Well below expectations: Below 122K: Such a scenario would be bearish for the dollar, and EUR/USD could break two or more  resistanance lines.

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

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