## U.S. Employment Data in the Final Stretch: Can the September Non-Farm Payroll Report Change the Dollar's Fate?

The U.S. Bureau of Labor Statistics (BLS) is scheduled to release the delayed September non-farm employment change (NFP) data at 13:30 Beijing time on Thursday. This report will serve as a key catalyst in determining the short-term trajectory of the dollar. Market focus has shifted from the weak August increase of 22,000 to the expected 50,000 in September, and the actual figures will directly influence expectations for the Federal Reserve (Fed) to cut rates in December.

## Diverging Signals in the Employment Market

Economists have shown interesting disagreement over the September data. The mainstream expectation is that non-farm payrolls will increase by 50,000, with the unemployment rate holding at 4.3%, and the year-over-year growth rate of average hourly earnings (AHE) remaining at 3.7%. However, TD Securities analysts present a more optimistic scenario—they predict employment could rebound to 100,000, with 125,000 new private sector jobs and a reduction of 25,000 in government employment.

This more aggressive forecast suggests that the resilience of the labor market may be underestimated. But the market should be cautious, as recent data has shown signs of divergence: the ADP employment change report indicates only 42,000 private sector jobs were added in October (below the expected 25,000), while Challenger layoffs surged by 183.1%, marking the worst October in over 20 years. These conflicting signals have raised doubts among investors about the true state of the U.S. employment market.

## The Critical Turning Point for Federal Reserve Policy

The importance of the September employment report lies in its timing—it will be the last comprehensive employment data before the Fed’s December policy meeting. According to the CME Group FedWatch tool’s real-time tracking, the probability of a 25 basis point rate cut in December has fallen from 50% to 33%, after reaching as high as 65% last week. This rapid shift in expectations reflects market doubts about further easing by the Fed.

The minutes from the October policy meeting have already sent a clear signal: policymakers warned that blindly lowering borrowing costs could undermine efforts to combat inflation. These comments dispelled the market’s previous optimistic expectations of a quick rate cut cycle. Meanwhile, the ISM Manufacturing PMI fell to 48.7 in October (well below the 49.5 forecast), while the Services PMI unexpectedly rose to 52.4, indicating structural divergence in economic growth.

## Critical Point for the Dollar and EUR/USD

The dollar index has rebounded amid a correction against major currencies, with the EUR/USD pair falling below the 1.1600 level again. This technical shift depends on the outcome of the September employment report:

**Weak Data Scenario**: If non-farm payrolls are below 50,000 and the unemployment rate unexpectedly rises, the market will confirm a soft U.S. labor market, significantly increasing the likelihood of a rate cut in December. Under this scenario, the dollar will face clear selling pressure, and EUR/USD is expected to rebound above 1.1700.

**Strong Data Scenario**: Conversely, if non-farm payrolls show significant growth, with the unemployment rate steady or declining, a robust employment foundation will dispel rate cut expectations and support the dollar. EUR/USD could continue its decline, testing below 1.1400 and challenging support levels.

## Technical Warning Signs for Bears

FXStreet analyst Dhwani Mehta’s technical outlook indicates that EUR/USD broke below the 21-day simple moving average (SMA) at 1.1574 on Wednesday. The 14-day relative strength index (RSI) on the daily chart remains below the midpoint, strengthening the case for further downside.

Short-term support is at the November 5 low of 1.1469. A break below this level would threaten the 200-day SMA at 1.1395. If buyers step in, the psychological level of 1.1350 will serve as the last line of defense. On the rebound side, the 21-day SMA (1.1574) is the first threshold to confirm a halt in decline, followed by the convergence of the 50-day and 100-day SMAs around 1.1650, and the round number 1.1700.

Overall, the release of the September U.S. employment data will determine the future policy direction of the Federal Reserve and reshape the relative value of the dollar. Regardless of the data, this report will inject directional momentum into the next moves of the dollar and major currency pairs.