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

Updates to the U.S. Non-Farm Payrolls (NFP) report may fuel the EUR/USD weakness following the European Central Bank (ECB) meeting as the world’s largest economy is anticipated to add another 180K jobs in February, while the Unemployment Rate is expected to narrow to 3.9% from 4.0% per annum the month prior.

Image of DailyFX economic calendar

Signs of a robust labor market should heighten the appeal of the U.S. dollar as it instills an improved outlook for growth and inflation, and another positive development may undermine the recent shift in the Federal Reserve’s forward-guidance as the central bank pledges to be ‘data dependent.’

In turn, the Federal Open Market Committee (FOMC) may come under pressure to squeeze in a rate-hike later this year as the economy shows little to no signs of an imminent recession, but an NFP print below 180K may fuel the recent rebound in EUR/USD as it encourages the central bank to retain a wait-and-see approach for monetary. Sign up and join DailyFX Currency Analyst David Song LIVEto cover the fresh updates to the U.S. NFP report.

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

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

JAN

2019

02/01/2019 13:30:00 GMT

165K

304K

0

-19

January 2019 U.S. Non-Farm Payrolls (NFP)

EUR/USD 5-Minute Chart

Image of eurusd 5-minute chart

U.S. Non-Farm Payrolls (NFP) jumped 304K after climbing a revised 222K in December, while the Unemployment Rate unexpectedly climbed to 4.0% from 3.9% per annum during the same period as the Labor Force Participation Rate widened to 63.2% from 63.1%. A deeper look at the report showed Average Hourly Earnings narrowing to 3.2% from a revised 3.3%, while Average Weekly Hours held steady at 34.5.

The initial reaction to the above-forecast NFP print was short-lived, with EUR/USD largely consolidating over the remainder of the session to close at 1.1454. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

EUR/USD Daily Chart

Image of eurusd daily chart
  • Failure to hold above the 2018-low (1.1216) raises the risk for a further decline in EUR/USD, but need a break/close below the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (7.86% retracement) to open up the next downside region of interest around 1.1140 (78.6% expansion).
  • Will also keep a close eye on the Relative Strength Index (RSI) as it approaches oversold territory, with a break below 30 raising the risk for a further depreciation in the exchange rate as the bearish momentum gathers pace.

For more in-depth analysis, check out the 1Q 2019 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.