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Trading the News - EUR/USD: Non-Farm Payrolls

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by , 06-03-2016 at 11:05 AM (1017 Views)
Trading the News: U.S. Non-Farm Payrolls

A 160K expansion in U.S. Non-Farm Payrolls (NFP) paired with a downtick in the jobless rate may boost the appeal of the greenback and spur a larger pullback in EUR/USD as it fuels expectations for an imminent Fed rate-hike.

What’s Expected:

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Why Is This Event Important:

The Federal Open Market Committee (FOMC) may implement higher borrowing-costs over the coming months especially as the U.S. economy approaches ‘full-employment,’ but signs of stagnant wage growth may encourage the central bank to further delay its normalization cycle as officials warn ‘survey-based measures of longer-run inflation expectations were little changed, on balance, in recent months, while market-based measures of inflation compensation were still low.’

How To Trade This Event Risk

Bullish USD Trade: NFP Expands 160K+, Unemployment Rate Narrows

  • Need red, five-minute candle following the NFP print to consider a short trade on EUR/USD.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish USD Trade: U.S Employment Report Fails to Meet Market Expectations

  • Need green, five-minute candle to favor a long EUR/USD trade.
  • Implement same setup as the bullish dollar trade, just in the opposite direction.

Potential Price Targets For The Release[/U]

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  • Even though EUR/USD remains stuck in a narrow range, the longer-term upward trend may reassert itself over the coming days as price & the Relative Strength Index (RSI) fail to preserve the bearish formation from early May.
  • Key Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
  • Key Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)


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