NFP and the Reactions in EUR/USD, GBP/USD and USD/JPY

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NFP and the Reactions in EUR/USD, GBP/USD and USD/JPY

NFP Surprises with a 248K reading

The main event risk today was the US NFP report, which came in much better than expected. First of all, the print for August was revised from a meager 142K to 180K, which is not great but of course much better. For September’s readings, forecasts were around 216K. The headline reading came in at 248K.

sept nfp

(click to enlarge; source: forexfactory.com)

If the August reading was any concern, which was not the case because the USD continued to rally up to this week, the September print should wipe any of those concerns out, and give the already strong USD even more fuel to rally across the board. This is what we are seeing now in the EUR/USD, GBP/USD, and USD/JPY, the 3 most traded USD-pairs.

EUR/USD 4H Chart 10/3
eurusd 4h chart 10/3

(click to enlarge)

The EUR/USD fell sharply after the strong NFP data, breaking down this week’s consolidation and below the 1.2571 low. This opened up fresh lows on the year, putting pressure on the 1.25 handle. The breakout also makes the 1.26 level a possible resistance area for any subsequent pullback. The next support factor could be at 1.2460, the 78.6% fibonacci retracement level of the 2012 to 2014 rally (1.2042 to 1.3993).

GBP/USD Weekly Chart 
gbpusd weekly chart 10/3

(click to enlarge)

GBP/USD fell sharply as well, breaking below September’s low of 1.6051, and taking price to new lows on the year. It is now pushing at the 1.60 handle. When we look at the weekly chart, we can see that the current price is at 50% retracement of the 2013 to 2014 rally (1.4813 to 1.7191), which is reinforced by the 200-week SMA. With the RSI showing oversold condition, we might want to anticipate some consolidation around 1.60 if not above it.

A this point, if there is a pullback, the 1.62 area is potentially a resistance as it represents some common lows during September’s consolidation.

USD/JPY 4H Chart 10/3
usdjpy 4h chart 10/3

(click to enlarge)

While EUR/USD and GBP/USD are making new lows. The USD/JPY is so far still below its high on the year, which was near 110.00. We saw dollar-yen retreat from 110 to 108 this week, and today’s NFP helped it push above 109. The pair is poised to test the 110.00 area, but it seems like the recently unhindered bullish market is losing steam. If after this strong NFP data, price fails to break 110 and falls back below 109, we might have a price top forming in the context of a medium-term consolidation period ahead. Above 110, there is a support pivot and 2008-high at 110.68, which we should monitor for sellers at least in the short-term.

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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.
  • umar

    I m still in favor of strenthning usd unless annoncement came from yellen to increase rates..