**US Dollar Forecast: Greenback Awaits September NFP Data; GBP/USD and EUR/USD Analysis**
*By James Hyerczyk | Reproduced and Expanded for Educational Purposes*
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The U.S. dollar remains at the forefront of the global currency markets as attention turns toward the September Non-Farm Payrolls (NFP) report. Recent trading sessions have seen heightened volatility in the greenback, with market participants parsing every data release amid concerns over U.S. economic resilience, inflationary pressures, and the future trajectory of Federal Reserve policy. Meanwhile, both the GBP/USD and EUR/USD currency pairs face their own headwinds, shaped by domestic economic data, central bank signals, and risk sentiment.
This article delivers an in-depth analysis of the factors shaping the dollar’s outlook, details on the significance of the latest U.S. economic releases, and a technical examination of the major Euro and Pound pairs.
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## **U.S. Dollar: A Pivot Point Approaches**
The U.S. Dollar Index (DXY) has recently pulled back from multi-month highs, but the retreat may prove temporary as traders look towards the September NFP report for fresh direction. The dollar’s rally since mid-summer was powered by:
– Persistent outperformance of U.S. economic data relative to major peers
– A hawkish Federal Reserve, which continues to signal the possibility of another rate hike before year-end
– Broad risk aversion, tied to concerns over Chinese growth and rising geopolitical tensions
### **Recent U.S. Data and its Market Impact**
This week’s slate of U.S. data has been mixed:
– **JOLTS Job Openings:** Tuesday’s release showed a sharper-than-expected decline in job openings, hinting at potential softening in the labor market. Markets interpreted this as a subtle sign the Fed’s tightening may be having an effect.
– **ADP Employment Report:** Wednesday revealed a softer-than-forecast private-sector hiring number, further fanning speculation that hiring momentum is slowing.
– **ISM Services PMI:** Thursday’s print beat expectations, reinforcing the view that the services sector remains robust despite signs of cooling elsewhere.
The big question remains: will the September NFP data corroborate the emerging theme of a moderating but still resilient U.S. labor market, or signal a sharper slowdown?
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## **September NFP Data: All Eyes on Friday**
The Non-Farm Payrolls report is widely regarded as the single most important monthly macroeconomic release in the U.S. calendar. For September, expectations are as follows:
– **Consensus Forecast:**
– Job creation to slow to approximately 170,000-180,000 (previous: 187,000)
– Unemployment rate steady at 3.8 percent
– Average hourly earnings growth to remain moderate at 0.3 percent month-over-month
### **Why the NFP Matters Now More Than Ever**
– **Fed Policy Outlook:** Markets are keenly focused on whether the Federal Reserve will deliver another rate hike in 2023. The September FOMC meeting emphasized a “higher for longer” rates regime but left the door open for further tightening should inflationary pressures persist.
– **Labor Market Dynamics:** Strength in hiring and wage growth could bolster the case for further hikes; conversely, unmistakable signs of weakness may prompt markets to price in rate cuts sooner.
– **Market Volatility:** Large deviations from forecasts often spark immediate volatility in the dollar, equities, and Treasury yields.
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## **Technical Analysis: DXY, EUR/USD, GBP/USD**
Let’s dive into a technical overview of the dollar index and two major currency pairs.
### **DXY: U.S. Dollar Index**
– **Support Levels:** 105.50, 104.80
– **Resistance Levels:** 107.00, 107.70
The DXY recently violated short-term support at the 106.75 region, bringing a multi-week up
Read more on GBP/USD trading.