TheNews

Trading the News: U.S. Non-Farm Payrolls (NFP)

A 180K expansion in U.S. Non-Farm Payrolls (NFP) accompanied by a downtick in the jobless rate may trigger a near-term decline in EUR/USD as the ongoing improvement in the labor market puts increased pressure on the Federal Open Market Committee (FOMC) to raise the benchmark interest rate sooner rather than later.

What’s Expected:

Why Is This Event Important:

The next interest-rate decision on September 21 may reveal a growing dissent within the FOMC as Chair Janet Yellen argues ‘the case for an increase in the federal funds rate has strengthened in recent months,’ but a marked slowdown in Average Hourly Earnings may drag on interest-rate expectations as the committee persistently warns ‘most survey-based measures of longer-run inflation expectations were little changed, on balance, while market-based measures of inflation compensation remained low.’

How To Trade This Event Risk

Bullish USD Trade: NFP Expands 180K or Greater

• Need red, five-minute candle following the print to consider a short EUR/USD position.
• 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. Job/Wage growth Disappoints

• 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
EUR/USD Daily

• Failure to preserve the bullish formation from the end of July may spur a larger decline in EUR/USD especially as the Relative Strength Index (RSI) follows suit, with a break/close below 1.1110 (50% retracement), which also lines up with the 200-Day SMA (1.1114), raising the risk for a move back towards the July low (1.0951).
• 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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