Lackluster Non-Farm Payrolls (NFP) Report to Fuel EUR/USD Rate Rebound
Trading the News: U.S. Non-Farm Payrolls (NFP)
Even though the U.S. Non-Farm Payrolls (NFP) are anticipated to increase another 198K in November, another 3.7% print for Average Hourly Earnings may drag on the dollar as it dampens the outlook for growth and inflation.
Signs of limited wage growth may spark a bearish reaction in the greenback as it undermines the Federal Reserve’s scope to further embark on its hiking-cycle, and a batch of lackluster data prints may fuel the recent rebound in EUR/USD as market participants scale back bets for above-neutral interest rates.
In turn, the Federal Open Market Committee (FOMC) may deliver a dovish rate-hike at the next interest rate decision on December 19, but another better-than-expected NFP report may weigh on EUR/USD as it puts pressure on Chairman Jerome Powell & Co. to extend the hiking-cycle. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.
Impact that the U.S. NFP report has had on EUR/USD during the previous release
|Period||Data Released||Estimate||Actual||Pips Change||Pips Change|
|11/02/2018 12:30:00 GMT||200K||250K||-27||-48|
October 2018 U.S. Non-Farm Payrolls (NFP)
EUR/USD 5-Minute Chart
U.S. Non-Farm Payrolls (NFP) increased 250K in October after expanding a revised 118K the month prior, while the Unemployment Rate held steady at 3.7% per annum for the second consecutive month. A deeper look at the report showed an unexpected pickup in the Labor Force Participation Rate, with the figure climbing to 62.9% from 62.7% in September, with Average Hourly Earnings also picking up to 3.1% from 2.8% during the same period.
The U.S. dollar gained ground following the positive development, with EUR/USD slipping below the 1.1400 handle to close the day at 1.1387. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.
EUR/USD Daily Chart
- Near-term outlook for EUR/USD remains uneventful as it carves a narrowing range, with the Relative Strength Index (RSI) highlighting a similar dynamic as the oscillator appears to be stuck in a wedge/triangle formation.
- With that said, EUR/USD remains capped by the 1.1510 (38.2% expansion) region, with the first area of support coming in around 1.1220 (78.6% retracement).
For more in-depth analysis, check out the Q4 Forecast for EUR/USD
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--- Written by David Song, Currency Analyst
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.