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- U.S. Non-Farm Payrolls (NFP) to Increase 180K in January.

- Average Hourly Earnings to. Climb to Annualized 2.6% from 2.5% in December.

- Join me today at 8:15 EST/13:15 GMT for live coverage of the January US NFP report.

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

DailyFX Calendar

A 180K expansion in U.S. Non-Farm Payrolls (NFP) paired with an uptick in Average Hourly Earnings may spark a bearish reaction in EUR/USD as it encourages the Federal Open Market Committee (FOMC) to further normalize monetary policy over the coming months.

The FOMC may follow a similar path to 2017 as Fed officials forecast three rate-hikes for this year, and a batch of positive developments may push the central bank to implement a March rate-hike as ‘the Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate.’

However, a set of mixed data prints may drag on the greenback as it dampens the outlook for growth and inflation, with the U.S. dollar at risk of facing additional headwinds over the near-term as market participants scale back bets for an imminent Fed rate-hike. New to trading? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Impact that the U.S. NFP report has had on EUR/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

DEC

2017

01/05/2018 13:30 GMT

190K

148K

-13

-22

December 2017 U.S. Non-Farm Payrolls (NFP)

EUR/USD 10-Minute Chart

EUR/USD 15-Minute Chart

U.S. Non-Farm Payrolls (NFP) increased 148K in December after climbing a revised 252K the month prior, while the unemployment rate held steady at an annualized 4.1% for the third consecutive month. Average Hourly Earnings were largely in-line with market expectations as the figure showed wage growth increasing an annualized 2.5% in December, while a separate report showed the Trade Balance deficit widening to $50.5B in November, from a revised $48.9B the month prior.

The initial market reaction was short-lived, with EUR/USD consolidating throughout the day to close at 1.2014. Want more insight? Sign up and join DailyFX Strategist Michael Boutros & David Song LIVE to cover the U.S. NFP report.

EUR/USD Daily Chart

EUR/USD Daily Chart

For additional resources, download and review the FREE DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

  • Topside targets are still on the radar as the Relative Strength Index (RSI) holds above 70, and the broader shift in EUR/USD behavior may continue to unfold over the near to medium-term as both price and the momentum indicator extend the bullish formations carried over from late last year.
  • Next topside hurdle coming in around 1.2640 (61.8% expansion) to 1.2650 (38.2% retracement) followed by the Fibonacci overlap around 1.2860 (50% expansion) to 1.2930 (78.6% expansion).
  • Need the RSI to flash a textbook sell-signal to warn of a pullback, with the first downside area of interest coming in around 1.2230 (50% retracement) followed by the 1.2130 (50% retracement) region.

--- Written by David Song, Currency Analyst

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

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