04.09.202609:13 Forex Analysis & Reviews: Failure at 23K vs. A Bet on 55K: Today's Non-Farm Employment Change Will Decide the Dollar's Fate for the Week Ahead

The euro and the pound have risen against the dollar for a second day, and the main reason was found not in the eurozone but in Tokyo: the yen strengthened from 160 to 155 per dollar — nearly 500 pips — as part of a currency intervention apparently coordinated with the US. It was this dollar weakness across markets, not European data, that pushed both the euro and the pound higher.

Notably, eurozone business-activity data by themselves did not provide support. The services index fell compared with July, and the composite PMI, according to final S&P Global data, remained at 52.0 — the same as in July. Neither the downward revision nor a stagnant composite index prevented the pair from continuing its gradual appreciation, confirming that eurozone fundamentals do not drive demand for the euro at the moment.

Producer-price data added arguments for a hawkish European Central Bank stance: the PPI rose 1.6% in July and 5.8% year-on-year, per Eurostat. Formally, this could support the euro on its own, but against the backdrop of currency intervention, this factor looks secondary.

Also noteworthy: even a strong US services report failed to move traders — the ISM Services jumped to 55.4 in August from 54.1 in July. The explanation here is again interventions and profit-taking ahead of the much more important US labor report due today.

In the first half of the day, eurozone retail sales for July are due: a 0.3% rise is forecast after a 0.3% decline in June, though this relatively old data is unlikely to materially change euro dynamics. European Central Bank Chief Economist Philip Lane will speak, and German industrial orders and Italian retail sales are scheduled. No UK data is due, but Bank of England Governor Andrew Bailey will speak; he may comment on recent price dynamics and persistent service-sector labor issues. Without clear hints on the BoE's future stance, high volatility in the pound is unlikely.

The main focus of the day, however, is the US. The Non-Farm Payrolls report is expected: after the disappointing July print of -23k, consensus calls for a rise of +55k and an unemployment rate of 4.1%. If the actual number significantly exceeds the forecast — say 100–120k — the dollar could regain leadership versus the euro, pound and other risk assets. If the print matches the forecast or is worse, dollar pressure will intensify, and we should expect a solid recovery in the euro and pound by week's end. Additional context will come from average hourly earnings and private payrolls, but the market will focus mainly on the headline employment change.

Technical notes and intraday levels (EUR/USD):

• On the hourly chart, long positions can be considered on pullbacks: false break of 1.1621, false break of 1.1601, or longs on a bounce from 1.1584 aiming for short 15–20 pip moves.
• Short positions are logical on a false break of 1.1641, especially since morning volatility may be limited.
• If bulls break and hold above the range, expect a larger move to 1.1684, where shorts on a failed breakout are appropriate, or sell on a rebound from 1.1673 after weak US data, targeting 15–20 pips.

Technical notes and intraday levels (GBP/USD):

• Decisive Bailey comments could push the pair above 1.3545: a break and hold there offers buying opportunities toward 1.3573 and 1.3596, from which selling on a rebound (target ~225 pips from the swing) is logical.
• Shorts from 1.3545 (previous day high) are justified on a false breakout, expecting the pair to remain in the range, or from a false breakout of 1.3573.
• Bears' near-term target is 1.3521: a drop and a false break there would be grounds to go long, continuing the reversal that began on September 3. A break of 1.3521 opens the move to 1.3501, where longs are again appropriate on failed holds, or buy a bounce from 1.3480 for ~15–20 pips.

All these scenarios for both pairs hinge on one figure coming out this afternoon. The market trades on expectations — whether the dollar reclaims the initiative or interventions, together with a weak NFP, send the euro and pound into a new leg of appreciation will be clear by Friday evening.