EUR/USD Squaring Up Ahead of the NFP Report

EUR/USD Squaring Up Ahead of the NFP Report

The USD started the week with some umph dragging the EUR/USD lower and signaling a bearish continuation. However, after the 4/1 session where we saw disappointing ADP employment data, the USD appears to be backing off as the EUR/USD starts to square up ahead of tomorrow’s (4/3) NFP report out of the US.

ADP Employment Change:
adp employment mar.
(click to enlarge; source:

According to the “Automated Data Processing” company which handles private company payrolls, there was an increase of 189K jobs in March. This reaching fell below the previous reading of 214K, while forecasts had projected a print around 227K. This was a clearly disappointing headline for jobs data, and gives the market a cautious expectation of Friday’s official jobs report.

US Manufacturing ISM:
us manuf. march.
(click to enlarge; source:

We also saw the ISM Manufacturing PM data disappoint as well. Although it came in at 51.5 for March, which is above 50 and shows expansion, it missed forecasts around a 52.5 reading. Also, we can see that manufacturing growth has decelerated since Q4 2014.

The soft US data helped EUR/USD find support above the 1.07 handle as we can see in the 4H chart.

EUR/USD 4H Chart 4/2
eurusd 4/2
(click to enlarge)

Note that the decline this week failed to bring price all the below below the cluster of 200-, 100-, and 50-period SMAs. Meanwhile, price never poked above the 200-period SMA during the rally in the second half of March. The 4H chart represents price mode in the past week or 2, and according to it, EUR/USD is squaring up at the crossroads ahead of tomorrow’s NFP.

Non-Farm Employment Change:
nfp forecast march. 2015
(click to enlarge; source:
Forecast: 247K
Previous: 295K

Economists are expecting a slide from February’s hot, 295K reading. A reading around 250K is decent and would actually be a positive sign towards the FOMC’s interest rate hike plans. However, we are very unlikely to see the move mid-year, which is probably going to hurt the USD a bit. So, unless the reading is close to 300K again, the jobs report will unlikely give the USD a boost.

However, against the euro, the USD should not retreat too much neither. Let’s see what happens after the NFP. A break below 1.07 puts EUR/USD on a bearish continuation or at least puts pressure on the 1.0462 low on the year up to the 1.05 handle.

EUR/USD Daily Chart 4/2
eurusd daily chart 4/2
(click to enlarge)

A break above 1.1050 would bring in the 1.0270-80 area, a previous support pivot that could turn into resistance if the EUR/USD remains bearish (which it should unless the NFP report tanks and is close to 200K or lower).

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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