Never miss a story from David Song

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

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

Updates to the U.S. Non-Farm Payrolls (NFP) report may curb the recent advance in EUR/USD as the economy is anticipated to add another 195K jobs in August.

Image of DailyFX economic calendar

At the same time, the Unemployment Rate is expected to narrow to 3.8% from 3.9% per annum in July, and signs of a stronger labor market should keep the Federal Reserve on track to further normalize monetary policy as central bank officials warn ‘it would likely soon be appropriate to take another step in removing policy accommodation.

In turn, a positive development may spark a bullish reaction in the dollar as it boosts bets for four Fed rate-hikes in 2018, but another below-forecast NFP figure paired with 2.7% print for Average Hourly Earnings may drag on the greenback as it dampens the outlook for growth and inflation. With that said, a batch of mixed data prints may keep EUR/USD afloat, with the exchange rate at risk of staging a larger advance as there appears to be a broader shift in market behavior. Sign up and join DailyFX Currency Analyst David Song LIVEto cover the NFP report.

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)

JUL

2018

08/03/2018 12:30:00 GMT

193K

157K

-21

-20

July 2018 U.S. Non-Farm Payrolls (NFP)

EUR/USD 10-Minute Chart

Image of eurusd 10-minute chart

The U.S. economy added 157K jobs in July, which compares to the 248K expansion the month prior, while the Unemployment Rate narrowed to 3.9% from 4.0% per annum during the same period. A deeper look at the report showed the Labor Force Participation holding steady at 62.9% for the second month, with Average Hourly Earnings highlighting a similar dynamic as the index printed at 2.7% in August.

The initial reaction to the mixed data was short-lived, with EUR/USD pulling back from the 1.1600 region to close the day at 1.1566. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

EUR/USD Daily Chart

Image of eurusd daily chart
  • There appears to be a broader shift in EUR/USD behavior as both price and the Relative Strength Index (RSI) break out the bearish trends from earlier this year, with a move above the 1.1640 (23.6% expansion) to 1.1680 (50% retracement) region raising the risk for a run at the July-high (1.1791), which largely lines up with the 1.1810 (61.8% retracement) hurdle.
  • However, lack of momentum to push back above the stated region raises the risk for range bound conditions as the 1.1510 (38.2% expansion) area appears to be holding up as near-term support.
  • Next downside region of interest comes in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region followed by the 2018-low (1.1301).

For more in-depth analysis, check out the Q3 Forecast for EUR/USD

Additional Trading Resources

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the DailyFX Beginners Guide!

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader series on how to effectively use leverage along with other best practices that any trader can follow.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.