TheNews

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

A 180K rise in U.S. Non-Farm Payrolls (NFP) may fuel the bullish sentiment surrounding the greenback and trigger a pullback in EUR/USD should the report put increased pressure on the Federal Reserve to further normalize monetary policy.

What’s Expected:

Why Is This Event Important:

With the Federal Open Market Committee (FOMC) widely anticipated to lift the benchmark interest rate at the December 14 meeting, a further improvement in labor market dynamics may encourage the central bank to implement higher borrowing-costs in 2017 especially as the U.S. economy approaches ‘full-employment.’ However, Chair Janet Yellen and Co. may make further attempts to buy more time as officials warn ‘market-based measures of inflation compensation have moved up but remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months,’ and the permanent voting-members may largely endorse a wait-and-see approach going into the year ahead as ‘the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.’

How To Trade This Event Risk
Bullish USD Trade: U.S. Economy Adds 180K Jobs or More

• Need red, five-minute candle following the NFP 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. NFP Report Disappoints

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

Potential Price Targets For The Release
EUR/USD Daily

• EUR/USD may stage a larger rebound it continues to hold within the ascending channel from the November low (1.0518), while the Relative Strength Index (RSI) continues to recover from oversold territory, but the longer-term outlook remains tilted to the downside as a bear-flag formation takes shape.
• Interim Resistance: 1.0780 (100% expansion) to 1.0800 (23.6% retracement)
• Interim Support: 1.0500 (50% expansion) to 1.0517 (December 2015-low)

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