September Non-Farm Payrolls data is about to be released, and the US dollar and European and American exchange rates will face a key test.

The U.S. Bureau of Labor Statistics is expected to release the delayed employment report at 13:30 Beijing time on Thursday

The September non-farm payroll data is scheduled to be released at 13:30 Beijing time this Thursday. This delayed report will become the market’s focus. The market expects non-farm employment to increase by 50,000 month-over-month, a significant improvement from August’s 22,000, while the unemployment rate may remain at 4.3%.

What is the core data traders are watching?

Economists generally expect that the September non-farm employment increase will rebound from August’s modest 22,000 to around 50,000. However, TD Securities analysts are more optimistic, predicting employment growth could reach 100,000, with 125,000 new jobs in the private non-farm sector and a possible decrease of 25,000 in the government sector.

Average hourly earnings, an important indicator of wage inflation, are expected to remain at a year-over-year growth rate of 3.7%, unchanged from last month. Regarding the unemployment rate, analysts anticipate it will stay steady at 4.3%, reflecting low layoffs in the labor market.

How do Federal Reserve rate cut expectations influence the dollar?

Recently, the Federal Reserve’s cautious stance and soft private sector employment data have shifted market expectations about future rate cuts. Fed policymakers are increasingly divided, struggling to balance inflation risks with a cooling labor market.

According to CME Group’s federal funds futures, the probability of the Fed cutting interest rates by 25 basis points in December has fallen from about 50% before the minutes to 33%. This shift in expectations directly impacts the strength of the dollar.

U.S. auto data processing company ADP released October employment data on November 5, showing 42,000 new private sector jobs, surpassing the 25,000 forecast. However, layoff data is less optimistic—Challenger, Gray & Christmas reported that layoffs announced by companies in October surged by 183.1% month-over-month, marking the worst October in over 20 years.

Two possible scenarios for EUR/USD movement

Currently, the EUR/USD exchange rate fluctuates around 1.1600. The dollar has recently rebounded against major currencies, but the sustainability of this rebound will depend on the specific figures of the non-farm employment data after its release.

Weak scenario: If non-farm employment is below 50,000 and the unemployment rate unexpectedly rises, it will further confirm the softening U.S. labor market, reinforcing market bets on a Fed rate cut in December. Under this scenario, the dollar will face selling pressure, and EUR/USD could rebound above 1.1700.

Strong scenario: Conversely, if the non-farm data shows robust employment growth and the unemployment rate remains steady or falls below 4.3%, it will dampen rate cut expectations and support the dollar’s rise. EUR/USD could continue its decline, testing below 1.1400.

Key technical support and resistance levels

FXStreet Asia chief analyst Dhwani Mehta’s technical outlook indicates that the EUR/USD pair broke below the 21-day simple moving average of 1.1574 at Wednesday’s close, and the 14-day relative strength index remains below the midline on the daily chart, adding credibility to a downward move.

If the downtrend continues, key support levels are the November 5 low of 1.1469 and the 200-day simple moving average at 1.1395. The psychological support level is at 1.1350.

To confirm a rebound, the pair needs to break above the 21-day simple moving average of 1.1574. The next bullish target is around the confluence of the 50-day and 100-day simple moving averages near 1.1650, with further upside potential toward the round number of 1.1700.

Market consensus: Although the September non-farm payroll data release is imminent and the data is delayed, it is still regarded as the last comprehensive employment report the Fed will have before its December monetary policy meeting, making its importance undeniable.