Friday's Nonfarm Payrolls (NFP) report showed the U.S. economy added 22,000 jobs in August 2025, falling short of market expectations of 75,000. The unemployment rate ticked up to 4.3 %, while average hourly earnings rose 3.7% YoY, pointing to moderating wage pressures.
The weaker-than-expected jobs report reinforced concerns that U.S. economic momentum is slowing, raising the likelihood that the Federal Reserve may pivot to a more dovish stance in the coming months. Markets are now pricing in a 90% chance of a 25-basis-point rate cut at the Fed's next meeting.
Friday's Nonfarm Payrolls (NFP) report showed the U.S. economy added 22,000 jobs in August 2025, falling short of market expectations of 75,000. The unemployment rate ticked up to 4.3 %, while average hourly earnings rose 3.7% YoY, pointing to moderating wage pressures.
The weaker-than-expected jobs report reinforced concerns that U.S. economic momentum is slowing, raising the likelihood that the Federal Reserve may pivot to a more dovish stance in the coming months. Markets are now pricing in a 90% chance of a 25-basis-point rate cut at the Fed's next meeting.
EUR/USD Gains on Dollar Weakness
The softer jobs data triggered broad dollar selling, allowing EUR/USD to climb toward 1.17589. The pair had traded near 1.16293 ahead of the NFP release but rallied sharply as investors reassessed Fed policy expectations.
Technically, the pair's outlook has improved in the short term. Resistance lies at 1.17589 and 1.18292, while immediate support is seen at 1.15731. A sustained close above 1.17589 could open the path toward 1.18750, while failure to hold gains may trigger profit-taking back toward support.
Momentum indicators, such as the RSI and the Momentum oscillator, suggest that buyers remain in control.
Gold (XAU/USD) Extends Rally
Gold prices advanced as the NFP miss sent Treasury yields lower and weakened the dollar. XAU/USD rose toward $3,644.88, finding support from renewed safe-haven demand.
The softer labor market data reduced the risk of further Fed tightening, lowering real yields and boosting the appeal of non-yielding assets like gold.
Key resistance for gold is seen at $3,644.88, with potential to test higher levels if momentum holds. On the downside, support lies at $3,540.84, where buyers are likely to defend positions, though overbought conditions could spark short-term pullbacks.
U.S. Treasury Yields Decline
In fixed income markets, the U.S. 10-year Treasury yield dropped to 4.08%, as traders priced in a slower economy and potential Fed easing. The move highlighted shifting market sentiment away from inflation fears and toward growth risks.
The yield curve flattened modestly, signaling expectations for weaker near-term growth. If yields continue to fall, the dollar may face additional headwinds, lending further support to EUR/USD and gold.
High Impact Economic Events
Wednesday 15:30 (GMT+3) - USA: PPI m/m (USD)
Thursday 15:15 am (GMT+3) - Europe: Main Refinancing Rate (EUR)
Thursday 17:30 (GMT+3) - USA: CPI m/m (USD)
Thursday 15:30 (GMT+3) - USA: Unemployment Claims (USD)
Friday 09:00 (GMT+3) - UK: GDP m/m (GBP)
Friday 17:00 (GMT+3) - USA: Prelim UoM Consumer Sentiment (USD)
Market Outlook
The market is now focused on whether August's weak NFP marks the start of a broader slowdown in the U.S. labor market. For traders, three instruments stand out:
- EUR/USD: With the dollar under pressure, EUR/USD has room to extend higher if it clears resistance. A close above 1.17589 would confirm bullish momentum.
- Gold (XAU/USD): Benefiting from lower yields and weaker dollar sentiment, but resistance zones could limit gains unless the Fed signals a clear policy pivot.
- U.S. 10-Year Treasury Yields: Continued declines would strengthen the dovish narrative, while a rebound in yields could cap upside moves in both gold and EUR/USD.
Bottom Line
Friday's NFP miss has shifted market sentiment decisively. The dollar weakened, EUR/USD climbed, gold extended gains, and Treasury yields dropped as traders priced in higher odds of Fed easing.
Looking ahead, the focus will be on Europe's Main Refinancing Rate, U.S. inflation, and retail sales data, which could either confirm the slowdown narrative or restore confidence in the economy. For now, the bias leans toward further dollar weakness, with EUR/USD and gold holding the upper hand as September trading unfolds.