EUR/USD: Trading the US Nonfarm Payrolls

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 leap 287K – dollar surges

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 shocked in the May report, plunging to just 38 thousand, well short of the estimate 159 thousand. The markets are forecasting a strong turnaround in June, with an estimate of 174 thousand. Will the indicator rebound as expected?

Sentiment and Levels

A new reality has descended on Europe, as  Brexit is here to stay and is taking its toll on Europe and the euro. The ECB is not keen to act quickly, but may have to follow the  BOE which is planning  looser monetary policy. Over in the US, monetary policy is not expected to be hawkish, but the economy is in much better shape than the Eurozone. So, the overall sentiment  is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1175, 1.1140, 1.1070, 1.10, 1.0905 and  1.0825

5 Scenarios

1. Within expectations: 171K to 177K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
2. Above expectations: 178K to 182K: An unexpected higher reading could  push the pair  below one support  line.
3. Well above expectations: Above 182K: Such an outcome could  push the pair lower and two or more  support lines could  fall as a result.
4. Below expectations:  166K to 170K: A weak reading could  result in  EUR/USD breaking above one resistance line.
5. Well below expectations: Below 166K. A very soft reading could result in the pair  breaking above  two or more resistance lines.

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