U.S. Employment Report Approaching: Can September Non-Farm Data Revive Market Confidence

The market holds its breath, awaiting the blockbuster data from the U.S. Bureau of Labor Statistics

As Thursday 13:30 Beijing time approaches, global USD traders are eagerly awaiting the U.S. September Non-Farm Payrolls (NFP) report. This delayed employment data will be a key reference for judging whether the Federal Reserve will continue to cut interest rates.

According to forecasts from multiple economic research institutions, U.S. September non-farm employment is expected to increase by 50,000 jobs, a significant rebound from August’s 22,000. The unemployment rate is expected to remain at 4.3%, while the year-over-year growth in average hourly earnings is projected at 3.7%, unchanged from last month. However, analysts at TD Securities offer a more optimistic outlook—they estimate private non-farm employment could reach 125,000, with government sector jobs possibly decreasing by 25,000, resulting in an overall employment rebound to 100,000.

Market Concerns Triggered by U.S. Employment Weakness

However, recent employment data has not met market expectations. Automatic Data Processing (ADP) reported a change of only 42,000 jobs in the private sector for October, surpassing the forecast of 25,000 but still showing sluggish growth. More concerning is the surge in layoffs—Challenger, Gray & Christmas data shows layoffs announced by companies in October soared by 183.1% month-over-month, marking the worst October in over 20 years.

Manufacturing data also remains weak. The Institute for Supply Management’s manufacturing Purchasing Managers’ Index (PMI) for October fell to 48.7, below the expected 49.5, reflecting manufacturing contraction pressures. However, the services PMI unexpectedly rose to 52.4, supported by growth in new orders.

Federal Reserve Rate Cut Expectations Turn Cautious

These uncertainties in the employment market have shifted the Fed’s policy stance. The October monetary policy meeting minutes warned that lowering borrowing costs could weaken efforts to combat inflation, making policymakers increasingly cautious about further easing. According to CME Group’s FedWatch tool, the probability of a rate cut in December has fallen from 50% before the meeting to 33%.

Against this backdrop, U.S. employment data will be crucial for the dollar’s movement. The dollar has already rebounded amid a correction against major currencies, pushing EUR/USD back below 1.1600.

How U.S. Employment Data Reshapes the Forex Landscape

If September non-farm employment falls below 50,000 and the unemployment rate unexpectedly rises, it will confirm weakness in the U.S. labor market and could reignite market bets on a December rate cut by the Fed. In this scenario, the dollar will face downside pressure, and EUR/USD could rebound to 1.1700.

Conversely, if non-farm employment shows strong growth and the unemployment rate remains at 4.3% or further declines, it will weaken expectations of a December rate cut, and a strong dollar could push EUR/USD further down to below 1.1400.

Technical Analysis Signals Downward Pressure

From a technical perspective, EUR/USD has shown signs of depreciation. FXStreet analyst Dhwani Mehta pointed out that the pair has broken below the 21-day simple moving average at 1.1574. The 14-day Relative Strength Index (RSI) remains below the midline on the daily chart, strengthening the bearish signal.

Recent support is at the November 5 low of 1.1469. A break below this level would threaten the 200-day moving average at 1.1395. The technical buy zone is around the psychological level of 1.1350. A recovery to the upside requires confirmation above the 21-day SMA (1.1574), with the next bullish target near 1.1650, where the 50-day and 100-day SMAs converge. Further rebound could reach the 1.1700 round number.

Market Awaits U.S. Employment Data Release

Although the September non-farm report is delayed, it remains the last comprehensive employment report before the December Fed monetary policy meeting, making it particularly important. Wells Fargo economists also emphasize that this data is crucial for assessing the U.S. labor market and will directly influence the dollar’s future trend and the short-term rhythm of the global forex market.