EUR/USD to Inch Towards Dec High on Lackluster NFP Report

U.S. Non-Farm Payrolls to Increase Less Than 200K for Second Straight Month.

Unemployment Rate to Hold Steady during Annualized 4.7%, Average Hourly Earnings to Slow to 2.8%.

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

Mixed expectations surrounding a U.S. Non-Farm Payrolls (NFP) news might beget a choppy marketplace greeting as a economy is projected to supplement 175K jobs in January, while salary enlargement is expected to delayed from a fastest gait of enlargement given 2009. Nevertheless, with Fed Fund Futures still pricing a larger than 60% for a Jun rate-hike, a array of certain developments might worsen a seductiveness of a greenback as a Federal Reserve appears to be on march to serve normalize financial process in 2017.

What’s Expected:

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Why Is This Event Important:

Indeed, a recent tongue from a Federal Open Market Committee (FOMC) suggests a executive banks is in no rush to exercise aloft borrowing-costs as acceleration continues to run next a 2% target, and another collection of muted information prints might furnish near-term headwinds for a greenback as it dampens bets for a Mar rate-hike. In turn, a Fed might try to tame marketplace expectations and buy some-more time as officials advise ‘market-based measures of acceleration remuneration sojourn low; many survey-based measures of longer-term acceleration expectations are small changed, on balance,’ though signs of stronger job/wage enlargement might worsen a seductiveness of a U.S. dollar as it puts increasing vigour on Chair Janet Yellen and Co. to lift a benchmark seductiveness rate progressing rather than later.

Expectations: Bullish Argument/Scenario

Improved certainty accompanied by a pickup in business outputs might beget a better-than-expected NFP report, and a certain enlargement might trigger a bullish greeting in a U.S. dollar as it boosts seductiveness rate expectations.

Risk: Bearish Argument/Scenario

Nevertheless, a slack in private-sector expenditure might drag on job/wage growth, and a weakening opinion for a U.S. labor marketplace might coax waste for a greenback as it encourages a Federal Reserve to check a normalization cycle.

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How To Trade This Event Risk(Video)

Bullish USD Trade: NFP Report Exceeds Market Expectations

  • Need red, five-minute candle following a NFP imitation to cruise a brief EUR/USD position.
  • If marketplace greeting favors a bullish dollar trade, sell EUR/USD with twin apart position.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to entrance on remaining position once initial aim is hit; set reasonable limit.

Bearish USD Trade: U.S. Job/Wage Growth Disappoints

  • Need green, five-minute candle to preference a prolonged EUR/USD position.
  • Implement same setup as a bullish dollar trade, only in a conflicting direction.

Potential Price Targets For The Release

EUR/USD Daily

EUR/USD Daily Chart

Chart – Created Using Trading View

  • EUR/USD continues to in. towards a Dec high (1.0873) after shutting above a Fibonacci overlie around 1.0780 (100% expansion) to 1.0790 (38.2% expansion) progressing this week, though a new developments in a Relative Strength Index (RSI) highlights a risk for a near-term depletion as a oscillator appears to be responding to a downward trend carried over from 2015; need a RSI to mangle a bullish arrangement from Nov to see EUR/USD reestablish a long-term downward trend.
  • Interim Resistance: 1.0880 (61.8% expansion) to 1.0910 (38.2% expansion)
  • Interim Support: 1.0340 (2017-low) and 1.0370 (38.2% expansion)

Check out a short-term technical levels that matter for EUR/USD streamer into a report!

Impact that a U.S. NFP reporthas had on EUR/USD during a before release

December 2016 U.S. Non-Farm Payrolls (NFP)

EUR/USD 5-Minute

EUR/USD Chart

U.S. Non-Farm Payrolls (NFP) increasing 156K in Dec following a revised 204K enlargement a month prior, while a jobless rate climbed to an annualized 4.7% from 4.6% during a same duration amid an uptick in a Labor Force Participation Rate. At a same time, Average Hourly Earnings grew 2.9% per annum to symbol a fastest gait of enlargement given 2009, and a ongoing alleviation in labor marketplace dynamics might keep a Federal Reserve on march to serve normalize financial process in 2017 as Chair Janet Yellen sees a executive bank ‘closing in’ on a twin mandate. Despite a slew of churned information prints, a U.S. dollar gained belligerent following a pickup adult in salary growth, with EUR/USD pulling next a 1.0550 segment to finish a day during 1.0532.

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Read More:

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GBP/USD to Take Cues From FOMC/BoE Interest Rate Outlook

Technical Weekly: Is USD/CHF a Tell?Gold Prices Back Below 1200- Here’s a Game Plan

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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