EUR/USD forex trading strategy
No one knows that the non-farm payrolls number will be tomorrow. The consensus is +200K. ADP was a bit stronger, the ISM non-manufacturing index was a bit weaker.
If you want to make a bet on it. The only one I would suggest is picking the number on our Facebook page for a chance to win a free t-shirt.
But there is a trade to be made in the run-up to the release.
Bulls versus bears
On one side you have EUR/USD bears. They've been bearish for a long time and they've done very well over the past six weeks. The crux of the bet was central bank divergence.
On the other side, you have EUR/USD bulls. That's a small group but it's growing.
Who has the upper hand in the 16 hours ahead of non-farm payrolls. If I'm a euro bull, a weak number would gloriously add to a trade that's deep in the money today.
If I'm a euro bear, I just took the worst single day loss since 2009, including more than 450 pips since the ECB. Do I really want to take another roll of the dice on non-farm payrolls?
My guess is the EUR/USD bears continue to get out of the way and that propels it to around the 200-day moving average at 1.1038 before the momentum finally stops. No matter what it is, I'd rather be flat into non-farm payrolls.
Afterwards, the market reaction to the report will tell us plenty. Be ready to get back into euro longs.
