EUR/USD: Trading the US Nonfarm Employment Change

US Nonfarm 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 can have a substantial  impact on  the direction of EUR/USD.

Nonfarm Employment Change dropped in March to  215 thousand, beating the estimate of 206 thousand. The markets are expecting  the downward trend to continue  in the  April  report, with an estimate of 203 thousand.

Sentiment and Levels

The euro remains at high levels against the dollar, much to the consternation of the ECB. However, there appears little that Mario Draghi & Co. can do to stop the euro’s rise. Although the US labor market has looked very strong, a surprisingly soft ADP Nonfarm Payrolls report could point to a downward correction in employment numbers, which would send the pair to lower levels. So, the overall sentiment  is neutral  on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1712, 1.15, 1.1460, 1.1410 and  1.1335

5 Scenarios

1. Within expectations: 200K to 206K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
2. Above expectations: 207K to 211K: An unexpected higher reading could  push the pair  below one support  line.
3. Well above expectations: Above 211K: Such an outcome could  push the pair lower and two or more  support lines could  fall as a result.
4. Below expectations:  195K to 199K: A  reading  below the 200-thousand level could  result in  EUR/USD breaking above one resistance line.
5. Well below expectations: Below 195K. A very weak reading could result in the pair  breaking above  two or more resistance lines.

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