NFP Data Surprises and Lifts the USD Across the Board

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NFP Data Surprises and Lifts the USD Across the Board

The US Non-Farm Payroll (NFP) reading for February came in at 295K, beating forecast of 240K. The January reading was 239K, revised down from 257K. The NFP readings have been beating forecasts and continue to push at the 300K mark, which would be a pace strong enough for the FOMC to raise interest rates around the middle of the year.

NFP feb 2015
(click to enlarge; source: forexfactory.com)

Also, the headline unemployment rate dropped to 5.5% from 5.7%, while forecasts called for a reading around 5.6%.

us unemployment
(click to enlarge; source: forexfactory.com)

Average hourly earnings grew only 0.1%, after a 0.5% reading in January. Forecasts were looking for a reading around 0.2%.

The jobs data today was generally better than expected and the monetary policy implication should give the USD a boost.

Indeed, when we look at some majors (EUR/USD, GBP/USD, and USD/JPY), we are seeing the greenback climbing.

EUR/USD was sliding throughout the week. The market seemed to be pricing in a strong jobs report. After breaking below a previous low on the year at 1.11, EUR/USD treated this level as resistance after the ECB monetary policy statement and press conference. It then fell below 1.10, and after today’s reaction to the NFP, it looks poised to reach the parity, 1.00 level before the FOMC actually raises rates.
eurusd 4h chart 3/6
(click to enlarge)

GBP/USD found a price top against the February rally earlier this week. Although it showed more resilience than the EUR/USD in February, it is falling the same in March. The market stalled after the BoE monetary policy decision, but continued the decline during the 3/6 session, even before the US jobs data. Afterwards, GBP/USD fell sharply below 1.51, and is now poised to test the 1.4950-1.50 lows on the year.
gbpusd 4h chart 3/6

USD/JPY was in a bullish breakout rally about a month ago. However, this breakout stalled at 120.50 and pulled back. Still, the 4H technical picture remained bullish as price held above the SMAs and the 4H RSI held above 40. It continued to drift higher, and is now accelerating after the US NFP data. The pair is now poised to test that 2014-high at 121.70, with risk of pushing even higher and continuing the trend that started from a 2011-2012 base at historic lows.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.