EUR/USD: Trading the US NFP Jan 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 +252K, unemployment, unemployment 5.6%

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 was outstanding in November, jumping to 321 thousand. This crushed the estimate of 231 thousand. The markets are expecting a drop in December, with the forecast at 241 thousand. Will the indicator repeat and beat the estimate?

Sentiment and Levels

The euro continues to slip and slide against the dollar,  and has dropped  into 1.17 territory.  Inflation is nowhere to be seen, and a growing threat of deflation could be enough to convince Draghi to  press the QE trigger later in the month.  US data has sagged somewhat, but market sentiment remains high as the economy seems on track for a rate hike sometime after Q1.  So, the overall sentiment  remains  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.2040, 1.20, 1.1875, 1.17, 1.1620 and 1.15.

5 Scenarios

1. Within expectations: 238K 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:  233K to 237K: A  weaker reading  than forecast could result in EUR/USD breaking above one resistance line.
5. Well below expectations: Below 233K. 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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