October US Jobs Report Rebounds to 65K After Weak September

On Friday at 13:30 GMT, the US Bureau of Labor Statistics (BLS) will release the October Nonfarm Payrolls (NFP) figures. The consensus forecast points to an increase of 65K jobs, compared with 29K in the prior month.

Although market participants broadly expect the Federal Reserve to deliver a 25-basis-point rate hike in December, the details of the employment report could shape their views on policy in early 2027 and influence the US dollar's valuation.

What to expect from the Nonfarm Payrolls report?

Markets anticipate an October NFP reading of 65K, following the disappointing 29K gain in September. The unemployment rate is projected to hold at 4.2%, while average hourly earnings are expected to rise 0.3% month-over-month, accelerating from 0.1%.

As expected, the Fed kept rates unchanged at 3.75%-4% after its October meeting. In the post-meeting press conference, Chair Kevin Warsh described the labor market as "positive," adding that policymakers are mainly focused on the price stability mandate.

Therefore, unless there is a significant downside surprise in the jobs data, market pricing for the December rate decision is unlikely to shift notably.

According to TD Securities, the dollar's sharp rally since September is likely to transition into consolidation toward year-end.

The bank reiterates: "after a sharp rally since September, our base case has been for the USD to see a modest relief selloff into year-end, similar to how the USD had performed following the 2018 US midterm election."

Strategists argue that incoming labor market data could be pivotal, noting that "a lower-than-consensus payrolls number could provide an additional catalyst for the USD retracement to take shape."

In that context, they "expect October NFP to remain subdued at 40k after job gains moderated to 29k in September," reinforcing the view that softer US data would help extend the dollar's post-election pullback.

How will the US October Nonfarm Payrolls affect EUR/USD?

The dollar came under heavy selling pressure midweek after Democrats won control of both the Senate and the House in the midterms, taking command of Congress for the final two years of Donald Trump's presidency.

Growing optimism about a de-escalation in the Middle East following the election outcome also triggered a sharp selloff in crude oil, easing fears about persistent inflation.

Analysts at ING argue that the scope for a deeper dollar correction remains limited in the near term, pointing to "a still-resilient US economy and at least one more rate hike from the Federal Reserve" as key supports.

However, they also note that the balance of risks could shift over the medium term, warning that "the Dollar could see a little more weakness into 2027, however, if an emboldened Democratic Party takes greater issue with Republican policy, including deregulation and the AI build-out."

An NFP print at or below 30K could exacerbate the dollar's selloff heading into the weekend, as it might cause markets to dismiss a Fed rate hike in January—currently with a probability of around 20% according to the CME FedWatch Tool. In that scenario, EUR/USD could build on its weekly gains.

Conversely, a significant upside surprise above 80K could support the dollar in the immediate reaction and push EUR/USD lower. Nevertheless, traders may refrain from taking large positions ahead of next week's key US inflation data, limiting the lasting positive effect on the dollar.

FXStreet's Eren Sengezer, European Session Lead Analyst, offers a brief technical outlook for EUR/USD:

"The near-term technical outlook suggests that EUR/USD is struggling to complete a bullish reversal. The pair holds above the 20-day Simple Moving Average (SMA) but the Relative Strength Index (RSI) indicator on the daily chart stays slightly below 50."

"On the upside, 1.1350 (static level, 50-day Simple Moving Average (SMA), former support) aligns as the first resistance level ahead of 1.1420 (100-day SMA). A daily close above the latter could attract technical buyers and open the door for an extended bullish action toward 1.1540 (200-day SMA)."

"Looking south, the first support level could be spotted at 1.1130 (lower arm of the Bollinger Bands) before 1.1000 (static level, round level)."