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

Updates to the U.S. Non-Farm Payrolls (NFP) report may heighten the appeal of the dollar as the economy is anticipated to add 180K jobs in March.

Image of DailyFX economic calendar

Signs of a robust labor market may encourage the Federal Reserve to preserve a wait-and-see approach for monetary policy as ‘overall conditions remaining favorable,’ and the central bank may stick to the sidelines at the next interest rate decision on May 1 as Chairman Jerome Powell & Co. pledge to ‘be patient in assessing the need for any change in the stance of policy.’

In turn, a print of 180K or greater may spark a bullish reaction in the U.S. dollar, but another below-forecast print may spark a short-term rebound in EUR/USD as it puts pressure on the Federal Open Market Committee (FOMC) to reverse the four rate-hikes from 2018.

Sign up and join DailyFX Currency Analyst David Song LIVE to cover 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)

FEB

2019

03/08/2019 13:30:00 GMT

180K

20K

+10

+11

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

EUR/USD 5-Minute Chart

Image of eurusd 5-minute chart

U.S. Non-Farm Payrolls (NFP) increased a meager 20K in February after expanding a revised 311K the month prior, while the Unemployment Rate narrowed to 3.8% from 4.0% per annum during the same period even as the Labor Force Participation Rate held steady at 63.2% for the second consecutive month. A deeper look at the report showed Average Hourly Earnings climbing to 3.4% from a revised 3.1% in January despite forecasts for a 3.3% print.

The U.S. dollar struggled to hold its ground following the batch of mixed data prints, with EUR/USD grinding higher throughout the day to close at 1.1232. Review the DailyFX Advanced Guide for Trading the News to learn our 8 step strategy.

EUR/USD Rate Daily Chart

Image of eurusd daily chart
  • The broader outlook for EUR/USD remains clouded with mixed signals as both price and the Relative Strength Index (RSI) snap bearish formations from earlier this year after trading to a fresh yearly-low (1.1176).
  • Nevertheless, the failed attempt to test the 2019-low (1.1176) along with the lack of momentum to close below the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (78.6% retracement) may spur range-bound conditions in EUR/USD, with a break/close back above the 1.1270 (50% expansion) to 1.1290 (61.8% expansion) region raising the risk for a move towards 1.1340 (38.2% expansion).
  • Next area of interest comes in around 1.1390 (61.8% retracement) to 1.1400 (50% expansion) followed by the 1.1430 (23.6% expansion) to 1.1450 (50% retracement), which largely lines up with the March-high (1.1448).

For more in-depth analysis, check out the 2Q 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.