Trade the Euro on the Delayed Non-Farm Payrolls

At long last, the US government is back in action, and the market will get its first major jobs data update in the New York trading session on Thursday. There has been a lot of volatility in Federal Reserve rate cut expectations in the last couple of weeks, with the market initially pricing in strongly a further 25-basis point cut from the FOMC in December, before the data vacuum weighed enough on sentiment to more than halve those expectations. Currently, the market is pricing in a 47% chance that the Fed will cut 25 basis points against 53% on a hold. These expectations could change dramatically if we see Thursday’s Non-Farm Payroll data come in significantly off expectations.

The market is pricing in the headline NFP number to come in around +60k for the month of September, with the Unemployment Rate remaining steady at 4.3% and the Average Hourly Earnings number coming in at a 0.3% month-on-month increase. Traders are expecting the impact of this data to be exacerbated due to the long delay and data vacuum that we have experienced, so anything much weaker than expected should see Fed rate cut expectations jump and the dollar fall, while an against-trend higher print should knock out the December cut and see the dollar rally strongly.

The Euro is set up nicely ahead of the data release, with technical levels close on both sides that should lead to good trading opportunities. It is currently sitting in the middle of the range on the Daily chart, with good trendline support coming in around 1.1535 and resistance around 1.1630. Results +/- 30k on the Non-Farm headline number should see these levels tested, with higher misses likely to lead to good break trade opportunities.

Resistance 2: 1.1655 – November High
Resistance 1: 1.1630 – Trendline Resistance

Support 1: 1.1535 – Trendline Support
Support 2: 1.1468 – November Low

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