US Dollar Declines On Conflicting Jobs Data. Forecast as of 21.11.2025
Without support from the Fed, US stock indices are falling. The US dollar, which has lost its status as a safe-haven asset, is weakening along with them. However, while the US administration seems not worried about the greenback’s decline, the collapse of the S&P 500 is indeed a disappointing development. Let’s discuss this topic and make a trading plan for the EUR/USD pair.
The article covers the following subjects:
Major Takeaways
- US employment is growing, as is unemployment.
- The odds of a Fed rate cut have increased.
- The Trump administration is confident about the labor market.
- Long positions can be increased if the EUR/USD pair breaks through 1.155.
Weekly US Dollar Fundamental Forecast
All secrets eventually come to light. Perhaps Donald Trump is angry with the Fed for its unwillingness to cut rates, not because he wants to bring back America’s golden age. The US leader may have invested in US stocks, and the reduced likelihood of monetary policy easing is pulling the S&P 500 index down. US labor market statistics for September only slightly lifted the odds of monetary expansion in December, from 28% to 36%, allowing the EUR/USD pair to rebound.
According to Cleveland Fed President Beth Hammack, lowering rates to support the labor market could prolong the period of above-target inflation and increase exposure to financial stability risks. Easing monetary policy allows investors to accept more risk. Financial conditions become more favorable, and prices pick up.
Unfortunately, the September employment report did not offer any clues as to what the Fed will do. Non-farm payrolls accelerated to 119,000. However, the figures for July-August were revised downward by a total of 33,000, and unemployment rose from 4.3% to 4.4%.
US Nonfarm Payrolls and Unemployment Rate
Source: Bloomberg.
Investors continue to grapple with the question of whether the labor market is too hot for monetary policy to be eased, or too cold for hawks to stop worrying about high inflation. I believe that the US jobs market is still fragile, but not as weak as many assume.
The US administration may have been particularly pleased with the September employment statistics. According to US officials, the figures exceeded expectations, and the new jobs were created. The average American’s salary is projected to climb by $1,200 by 2025. However, there are still significant challenges to be addressed. Joe Biden’s policies have triggered high inflation, and President Trump is committed to finding a comprehensive solution.
Could this be achieved by lowering interest rates? Turkish President Recep Erdogan pursued a similar approach several years ago, prompting the central bank to adopt a more accommodating monetary policy. Officially, this move was aimed at addressing concerns about excessive usury, which was linked to rising inflation. As a result, the country faced a severe price and currency crisis, leading to a significant devaluation of the lira.
However, as long as the Fed maintains its independence, the worst can be avoided. Following the September employment report, the futures market slightly increased the likelihood of a federal funds rate cut in January, from 65% to 70%. This suggests that the scenario of a temporary strengthening of the US dollar followed by weakness in the first half of 2026 remains the baseline. The only question is when exactly to buy the EUR/USD pair.
Weekly EURUSD Trading Plan
A controversial set of statistics on the US labor market for September allowed the EUR/USD pair to rebound. Long positions can be opened on a decline or on a return above 1.1525. At the same time, long trades can be built up on a breakout of 1.155.
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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