EUR/USD – Trading the US Unemployment Claims

EUR/USD – Trading the US Unemployment Claims

US Unemployment Claims is released weekly, and measures the number of people filing for unemployment for the first time. It is considered an important measure of the health and direction of the US economy. A reading which is higher than the market forecast is bullish for the euro.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Thursday at 12:30 GMT.

Indicator Background

Analysts closely monitor employment data, and Unemployment Claims provides them the opportunity to track the US employment picture on a weekly basis.  The labor market  is highly correlated with economic growth, as an increase in employment will result in greater consumer confidence and an increase in consumer spending. In turn, increased consumer spending leads to further growth in the economy.

Unemployment Claims has been steady in recent weeks,  and the indicator  came in at 315  thousand new claims, edging above the estimate of 314 thousand. Little change is expected in the upcoming release.

Sentiments and levels

ECB head Mario Draghi hit the euro with some dovishness, and used the best moment to do so: after the  strong NFP. With critical support of 1.35 still below, there is room for more drops. It’s important to note that recent German  numbers have not impressed and  are weighing on the euro. With US employment figures looking sharp, we could see a bullish tone from the FOMC, countering  Yellen’s dovish message.  We have seen such counter moves in the past. All in all, there is  now more room to the downside for the pair. So, the overall sentiment is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.37, 1.3677, 1.3650, 1.3610, 1.3585 and  1.3550.

5 Scenarios

  1. Within expectations: 311K to 319K: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 320K to 330K: An unexpected  higher reading can send the pair  above one resistance line.
  3. Well above  expectations:  Above 330K:  High unemployment numbers would be bearish for the dollar. A second resistance line  could be broken on such an outcome.
  4. Below expectations: 300K to 310K: A positive reading could push EUR/USD lower, and one  support  line could be broken.
  5. Well below expectations: Below  300K. A  sharp decrease  in unemployment claims could lead to the pair breaking a second support level.

For more on 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.