US Dollar Wobbles Amid Lack of Jobs Statistics. Forecast as of 03.10.2025
The Fed has made it clear that it is concerned about the labor market. However, it is not possible to ascertain its current state. The delay in data publications due to the shutdown is creating turbulence in the market, triggering wide fluctuations in the EURUSD pair. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The Fed suggests referring to alternative data.
- The US dollar is sensitive to the S&P 500 index.
- The labor market is puzzling for investors.
- Long positions on the EURUSD pair can be opened if the quotes rise above 1.1755.
Weekly US Dollar Fundamental Forecast
In the absence of relevant data, the market becomes highly volatile. The shutdown has prompted investors to seek alternative sources of information and rely on comments from FOMC officials, who themselves are utterly overwhelmed. Such confusion leads to significant volatility in the EURUSD rate. The major currency pair is sensitive to the performance of the US stock market, while investors continue to buy the S&P 500 index on dips.
According to Prestige Economics, Bloomberg’s leading forecaster for the past two quarters, in the absence of official statistics, it is better to rely on comments made by Fed representatives. The company anticipates a weakening of the US dollar due to the US shutdown, followed by a subsequent recovery once the government resumes activities. It forecasts the EURUSD pair to rise to 1.19 by the end of the year.
US Dollar Performance
Source: Bloomberg.
The issue is that FOMC officials are equally uncertain as investors. According to Austan Goolsbee, alternative data sources can be useful. According to research by his colleagues at the Federal Reserve Bank of Chicago, the US unemployment rate remained at 4.3% in September, consistent with the August figure, reflecting the robust performance of the US economy. As a result, the report indicated a decline in hiring and an increase in layoffs.
EURUSD bears were encouraged by the positive news about stable unemployment and the decline in the S&P 500 index, triggered by Scott Bessent’s statements and the fall in Tesla shares. The Treasury Secretary stated that the shutdown would have an adverse impact on economic growth and hit working Americans. He has referred to Democrats as “terrorists,” while Republicans are pursuing a significant expansion of government funding. Meanwhile, despite record sales by the electric car manufacturer, investors have expressed concern about Tesla’s prospects in light of the cancellation of government subsidies.
However, the decline in the S&P 500 was short-lived. Speculators generally adopt a buy-the-dip strategy, taking advantage of market fluctuations to build long positions. As a result, the US dollar encountered some pressure, and the EURUSD pair returned above 1.17.
Foreign-Born Share of US Workforce
Source: Reuters.
It is scary and difficult to move forward in the dark. The Fed has made it clear that it is concerned about the labor market. However, it is difficult to say exactly what is happening with it. Is the slowdown in employment, from more than 100,000 at the beginning of the year to an average of 29,000 per month in the summer, caused by the economic slowdown? Or is it happening against the backdrop of a labor shortage due to the US administration’s anti-immigration policy? Both factors may be involved.
Weekly EURUSD Trading Plan
Thanks to the rollercoaster ride, the EURUSD pair has clearly marked the boundaries of the short-term consolidation range of 1.1685–1.1755. A breakout above the upper boundary will generate a buy signal.
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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