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EUR/USD Downside Targets in Focus Ahead of Non-Farm Payrolls (NFP)

EUR/USD Downside Targets in Focus Ahead of Non-Farm Payrolls (NFP)

David Song, Shuyang Ren,

- U.S. Non-Farm Payrolls (NFP) to Increase 200+K for Seventh Consecutive Month.

- Would Match the Longest String of 200+K Prints Since 1997.

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Trading the News: U.S. Non-Farm Payrolls

The EUR/USD may face a further decline over the next 24-hours of trade as the U.S. Non-Farm Payrolls (NFP) report is expected to show the world’s largest economy adding another 230K jobs in August while the jobless rate is expected to narrow to an annualized 6.1% from 6.2% the month prior.

What’s Expected:


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Why Is This Event Important:

Signs of a more robust recovery may further boost interest rate expectations as the Federal Open Market Committee (FOMC) is expected to halt its asset-purchase program at the October 29 meeting, and the bullish sentiment surrounding the U.S dollar may gather pace throughout the remainder of the year as a growing number of central bank officials show a greater willing to normalize monetary policy sooner rather than later.

Expectations: Bullish Argument/Scenario




ISM Non-Manufacturing- Employment (AUG)



ISM Manufacturing- Employment (AUG)



Gross Domestic Product (Annualized) (2Q S)



The pickup in economic activity paired with the highest ISM employment prints for 2014 may highlight a further expansion in job growth, and an above-forecast NFP figure may spur fresh monthly lows in the EUR/USD amid the deviation in the policy outlook.

Risk: Bearish Argument/Scenario




Personal Spending (JUL)



Durable Goods Orders ex Transportation (JUL)



Advance Retail Sales (MoM) (JUL)



On the other hand, the recent slowdown in private-sector consumption - one of the leading drivers of growth - may generate another weaker-than-expect print, and a soft employment reading may spur a more meaningful pullback in the greenback as it dampens the outlook for the world’s largest economy.

How To Trade This Event Risk(Video)

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Bullish USD Trade: NFPs Climb 230K or Greater While Jobless Rate Slips to 6.1% or Lower

  • Need red, five-minute candle following the release to consider a short trade on EUR/USD
  • If market reaction favors a long 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: Job Growth Falls Short of Market Forecast

  • 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 Chart

Chart - Created Using FXCM Marketscope 2.0

  • Downside targets remain favored as RSI pushes deeper into oversold territory.
  • Interim Resistance: 1.3350 (61.8% expansion) to 1.3370 (50.0% retracement)
  • Interim Support: 1.2870 (50.0% expansion) to 1.2900 (1.618% expansion)

Read More:

Key Levels for EUR Crosses- USD/CAD Inverse H&S Pattern at Risk

Euro Plunges as European Central Bank Cuts Rates, Announces QE

Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month


Data Released



Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JUL 2014

8/01/2014 12:30 GMT



+ 24

+ 33

July 2014 U.S. Non-Farm Payrolls


The U.S. economy added 209K jobs in July, following a revised 298K increase the month prior. The print was below the average estimate of 230K. The jobless rate unexpectedly rose to 6.2% from 6.1% in June as discouraged workers returned to the labor force. Nevertheless, the greenback lost ground following the below-forecast print, with the EUR/USD rallying to a high of 1.3443 going into the European close.

--- Written by David Song, Currency Analyst and Shuyang Ren

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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