EURUSD to Stage Near Recovery on Poor NFP Report

EURUSD to Stage Near Recovery on Poor NFP Report



EURUSD to Stage Near Recovery on Poor NFP Report

EURUSD to Stage Near Recovery on Poor NFP Report

NFP Report Another 180K expansion in U.S. Non-Farm Payrolls (NFP) accompanied by a downtick in the jobless rate may boost the appeal of the greenback and trigger further losses in EURUSD as it puts pressure on the Federal Open Market Committee (FOMC) to further normalize monetary policy in 2016.

Even though Fed Funds Futures highlight a 12% probability for a September rate-hike, a further improvement in labor market dynamics may encourage central bank officials to adopt a more hawkish outlook for monetary policy as the U.S. economy approaches ‘full-employment.’ However, an unexpected slowdown in wage growth may keep the FOMC on the sidelines throughout 2016 as the central bank warns ‘market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.’

However, U.S. firms may scale back on hiring amid slowing outputs paired with signs of a weaker-than-expected recovery, and a dismal labor report may drag on the greenback as market participants push out bets for the next Fed rate-hike.

 

Bullish USD Trade: NFP Increases 180K or More, Labor Force Participation Improves

  • Need red, five-minute candle following the NFP print to consider a short trade on EUR/USD.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.
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