EUR/USD: Trading the US NFP Mar 2015

EUR/USD: Trading the US NFP Mar 2015

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.

Update:  Non-Farm Payrolls + 295K – excellent news  – USD higher

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.

Nonfarm Employment Change continues to look sharp and has  exceeded the forecast for three straight readings. The indicator improved to 257 thousand in the January report, easily beating the forecast of 236 thousand. However, the markets are braced for a softer reading in February, with an estimate of 240 thousand. Will the indicator again beat this prediction?

Sentiment and Levels

With Greece receiving a four-month bailout extension, the crisis will be on the backburner for a while. This means that monetary policy divergence is back  in the  spotlight  and it doesn’t bode well for EUR/USD. ECB head Mario Draghi  is unlikely to make any moves  at the policy meeting, but  with euro-zone QE commencing in March, the euro is likely to weaken, even if  deflation doesn’t further deepen.  In the US, Janet Yellen testimony in Congress  basically prepared us for the removal of forward guidance, and  a strong  NFP could boost the June rate expectations. So, the overall sentiment  is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1270, 1.12, 1.1113, 1.10, 1.0760 and 1.05.

5 Scenarios

  1. Within expectations: 236K to 244K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
  2. Above expectations: 245K to 249K: An unexpected higher reading could send the pair  below one support  line.
  3. Well above expectations: Above 249K: The chances of such a scenario are low. Such an outcome could  push the pair lower and two or more  support lines could  fall as a result.
  4. Below expectations:  231K to 235K: A  weaker reading  than forecast could result in EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 231K. In this scenario, the pair could break through two or more resistance lines.  

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

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.