EUR/USD Rises on NFP, But Gains Could Be Capped
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EUR/USD Rises on NFP, But Gains Could Be Capped

US Non-Farm Payrolls dropped by 131K, double the median expectations. This result is very disappointing. EUR/USD leaped from 1.3170 before the release to 1.3220 immediately afterwards. Note that the private sector, which is in the limelight added 71,000 jobs, so the Euro might not have the strength needed to break higher.

The unemployment rate remained unchanged at 9.5%, slightly better than a rise to 9.6% that was expected. But this isn’t important:

What is important is that the private sector gained jobs – 71,000. This is a better report than the ADP number (48K), although slightly worse than expected (90K) and it could ease the fall of the dollar, despite the terrible headline figure. So, 1.3267 – the peak at the beginning of the week which is also an important resistance line, could hold.

Update: EUR/USD made the break higher but stayed close to the resistance line – 1.3267.

Earlier this week, the ADP Non-Farm Payrolls report was slightly better than expected. It showed a gain of 48,000 jobs in the private sector. This created hope for a better result in the official Non-Farm Payrolls, especially as the government’s census in May still has an impact on the headline number. As written in the NFP preview, the private sector part of the NFP was in the limelight, making also the ADP report more important.

The US dollar lost ground up to Wednesday’s ADP report, the dollar lost ground, and then it stabilized.  On the other hand, Thursday’s weekly jobless claims report was disappointing – it rose to 479K, just below the top border of a range that characterizes this figure in recent months. But this didn’t have too much impact on the greenback – tension remained high and trading became quite tight before the release.

EUR/USD got close to the bottom border of the uptrend channel, but managed to stay away before the release, and even escape it as the New York session opened at 12:00 GMT. As aforementioned, it later jumped.

EUR/USD Technicals

A break above 1.3267 will open the road to 1.3392, the uptrend resistance (currently at this zone), and then to the important 1.3435 line, which was a support line in the past.

A drop will send the pair to support around 1.3160, which is the uptrend support line at the moment and further below to 1.3114 – which turned from a strong line of resistance to a strong line of support this week.

Other Currencies

The Canadian dollar suffered from losses against the greenback, due to its own employment data. Canada lost jobs in July – this disappointing outcome sent USD/CAD above 1.02.

Other currencies remained around earlier levels before the release, and reacted in a similar way to the Euro afterwards.

–Updates to come —

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.