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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.

NFP only 38K – USD crashes – live blog

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  plunged in  April to  160 thousand, well below the estimate of 203 thousand. Little change is expected in the May report, with an estimate of 159 thousand.

Sentiment and Levels

In the Eurozone, weak inflation figures  will likely mean  looser monetary policy for longer, and a dovish message from Mario Draghi could send the euro lower.  In the US, a June rate hike  isn’t likely, but one in July is  certainly an option. The monetary policy divergence play could continue this week.  So, the overall sentiment  is neutral  on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1375, 1.1335, 1.1230, 1.1175, 1.1140  and  1.1070

5 Scenarios

  1. Within expectations: 155K to 163K. In such a scenario, the EUR/USD is likely to rise within  range, with a small chance of breaking higher.
  2. Above expectations: 164K to 168K: An unexpected higher reading could  push the pair  below one support  line.
  3. Well above expectations: Above 168K: Such an outcome could  push the pair lower and two or more  support lines could  fall as a result.
  4. Below expectations:  150K to 154K:  In this scenario, EUR/USD breaking above one resistance line.
  5. Well below expectations: Below 150K. A very weak reading could result in the pair  breaking above  two or more resistance lines.

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