EUR/USD: Trading the US NFP Apr 2012

The Non-Farm Employment Change, released by the US Government,  measures the change in the number of 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. Thus, the publication of employment data, such as the Non-Farm Employment Change, is highly anticipated by the markets. Traders should  be aware  that an unofficial indicator, the ADP    Non-Farm Employment Change, was released earlier in the week, prior to the official US Government release. It posted a reading of 209K, just above  this indicator’s  market forecast of 205K.

In March, the indicator posted a reading of 227K, which was well above the market forecast of 209K. The market  prediction for April has been lowered to 209K. Will the indicator repeat and beat the market forecast this month?

Sentiment and Levels

The level of uncertainty rose concerning the both the debt crisis and the pace of the US recovery. Although the long term picture remains bearish for  EUR/USD, given the  recession in Europe, things can change  in both directions. Thus, the overall sentiment is neutral on EUR/USD  towards this release.

Technical levels from top to bottom: 1.33, 1.3212, 1.3135, 1.3080, 1.30 and 1.2945.

5 Scenarios

1. Within expectations: 203K to 215K: 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: 216K to 222K: A reading above expectations would signal economic expansion, and could push the pair  below one  support level.
3. Well above expectations: Above 222K: A sharp rise in employment numbers could push EUR/USD downwards, and two or more levels of resistance could be broken.
4. Below expectations: 196K to 202K: The pair could rise on a weak reading, with one resistance line  at risk.
5. Well below expectations: Below 196K: Such a scenario would be bearish for the dollar, and EUR/USD could break  two  or more resistance lines.

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