Trading Ahead of Tomorrow’s NFP Report

Well last night certainly was a blast. In a major move of intervention, the EUR/USD skyrocketed some 300 pips to fire across the 2500 line like it wasn’t even there. Might we see more upside?

My gut reaction said no, which is why I entered a short once momentum stopped. The EUR/USD has just dipped under 1.2500 as of this writing and London is due to open in about an hour.

This week has had many bad reports for the USA along with the end of a quarter and month. And to cap it all off, we get the NFP report out tomorrow.

I haven’t met one person who is expecting anything less than terrible news.

But that might be a good thing. Hear me out.

The forecast for Non-Farm Payrolls tomorrow is -106k. And many expect it to be worse. In my own quick analysis, I was thinking somewhere south of -200k. My theory is the market is pricing in terrible information. In fact, I think it’s wound up so tight that if we get a number that’s under -106k, it could be “explosively good.”

And the key will be the private sector employment, which absolutely sucked last time.

Let’s remember, the Eurozone has many, many issues as well. While I don’t normally try to catch a falling knife, there’s recent trends in place that point to the EUR/USD coming down. Perhaps it’s already happening.

We’ll see where London takes the euro shortly. As for my short position, it’s on a tight lease. I always keep a small portion of my capital as “speculative” and I just had to use it here since the last two times the euro has hit the 1.2500 level, it’s come back. 1.2000 anyone?

By the way, if you’re making money shorting USD/CHF, Forex isn’t always this easy. Right now, it’s like a flight to gold. Enjoy it while it lasts.