EUR/USD: Trading the US NFP Sep 2016

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 +173K but other data is positive

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 affect the direction of EUR/USD.

Nonfarm Employment Change  slipped  in July,  to 215 thousand, short of the forecast of 225 thousand. This marked a 4-month low for the indicator. Little change is expected in the August release, with an estimate of 217 thousand.

Sentiment and Levels

The euro  has rallied recently, enjoying its role  a safe haven currency,  as  a potential delay in the Fed hike and the Chinese yuan  devaluation (with the accompanying stock market crash)  strengthened the common currency. Yet also the ECB can play this game and could announce further  monetary stimulus  steps in order to help the lackluster economy.  In addition, after we had a washout of euro shorts, positioning is probably more  favorable for a renewed downturn.  So, the overall sentiment  is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1460, 1.1373, 1.1290, 1.1215, 1.1113 and 1.1050.

5 Scenarios

1. Within expectations: 220K to 230K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
2. Above expectations: 231K to 250K: An unexpected higher reading could send the pair  below one support  line.
3. Well above expectations: Above 250K: 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:  200K to 219K: A  weaker reading  than forecast could result in EUR/USD breaking above one resistance line.
5. Well below expectations: Below 200K. In this scenario, the pair could break through two or more resistance lines.

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

To follow this event live:   [do action=”calendar-event” eventid=”9cdf56fd-99e4-4026-aa99-2b6c0ca92811″/]