US Dollar Declines Amid Soft Jobs Data. Forecast as of 07.11.2025
Whatever the details of Donald Trump’s alternative plan may be, it will clearly be less effective than the current one. The president’s defeat in the Supreme Court carries the risk of severe economic consequences, adding to the already crippling US economy. Let us discuss these topics and make a trading plan for the EUR/USD pair.
The article covers the following subjects:
Major Takeaways
- The Supreme Court is biased towards abolishing tariffs.
- The shutdown has masked the weakness of the US labor market.
- The odds of a Fed rate cut in December are growing.
- One can increase long positions on the EUR/USD pair at 1.15.
Weekly US Dollar Fundamental Forecast
The removal of tariffs would be devastating for the US economy. That is what Donald Trump claims, and investors have no reason not to believe the US president. The reduced odds of his victory in the Supreme Court, from just under 50% to 20% in the prediction markets, are causing investors to flee the US dollar. All the more so as hopes are growing for a quick end to the shutdown, which is favorable for EURUSD bears.
The US government shutdown has forced the Fed to remain cautious and masked the structural weakness of the US labor market. In August, the USD index plummeted against weak jobs data. According to Morgan Stanley, once the shutdown is over, markets will see a slowdown in employment and restore expectations of an aggressive easing of the Fed’s monetary policy.
USD Index Performance During US Government Shutdown
Source: Bloomberg.
The Challenger, Gray, and Christmas report proves that the US labor market is structurally fragile. The company claims that American firms plan to slash over 153,000 jobs in October, notching the highest figure since 2003. Back then, the widespread adoption of mobile phones cost people their jobs. Today, it is artificial intelligence. The decline in consumer spending, increased costs, and budget cuts have played a significant role.
Since the beginning of 2025, employers have laid off nearly 1.1 million employees, which is 65% more than during the same period last year. The cooling of the labor market is evident. The Fed, which has made employment a priority, will certainly continue to cut rates, no matter how hard Jerome Powell tries to dispel doubts about this. After the Challenger, Gray, and Christmas report, the derivative market increased the chances of monetary policy easing in December from 62% to 69%, and the US dollar had to retreat.
October Job Cuts in US
Source: Bloomberg.
Could the US economy freeze even more due to the Supreme Court’s cancellation of tariffs? In fact, Donald Trump lost this case before it even began. The law gives Congress the power of the purse so that the president does not gain dictatorial powers. The Senate and the House of Representatives do not have the right to transfer their powers to impose taxes to the White House, and import duties are taxes.
Another issue is that Donald Trump has a plan B: to retroactively implement tariffs by passing them through Congress. There are many pitfalls, as the Senate also considers them illegal. As a result, the US could lose $750 billion in customs duties per year announced by the Treasury, as well as trillions of dollars in investments promised by other countries.
Weekly EURUSD Trading Plan
A weak economy means a weak currency. If the US economy is slowing, long positions on the EUR/USD pair formed at 1.15 can be increased.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of EURUSD in real time mode
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