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US Dollar Outlook - US NFP Report Capable of Sparking USD Volatility

US Dollar Outlook - US NFP Report Capable of Sparking USD Volatility

Nick Cawley, Senior Strategist


What's on this page

US Labor Report and US Dollar Price, Chart and Analysis

  • US dollar shaky after recent weak economic data.
  • USD volatility post-NFP likely.

Q3 2019 USD Forecast and Top Trading Opportunities

USD Under Pressure from a Weakening Economic Picture

The outlook for the US economy is dimming, according to recent data, and today’s US Labor Report (NFP) may well point to a weakening labor market, heaping pressure on the Fed to continue cutting interest rates to try and get ahead of the curve. The Fed is fully expected to cut rates by 0.25% this month and expectations are growing of an additional 25 basis point cut in December. The US ISM manufacturing print was the lowest in a decade, while the composite reading hit a three-year low. Both releases missed market expectations by a notable margin.

Today’s no-farm payroll report now takes on increased importance as the US jobs market has been one of the ongoing bright spots of the economy and any downturn will add to the economic gloom. Global growth is slowing, especially in the manufacturing sector, while political uncertainty continues to crimp investment.

While the US jobs market continues to grow, the number of new jobs created over the last three months has decreased, prompting fears of a slowdown. The report today is expected to show that 145k new jobs were created in September, against a prior month’s lowly 130k, and any miss to the downside may push the recently weak US dollar lower still.

Live Data Coverage: US Non-Farm Payrolls 12:15 GMT - Webinar

NFP and Forex: What is NFP and How to Trade it?

The US dollar basket has fallen sharply in the last three days after making a fresh peak at 99.22, the highest level since May 2017. The daily chart shows that while the dominant uptrend remains in place, the support line is only 20 ticks away and is vulnerable if NFPs miss expectations. Below here a cluster of higher lows come into play before the 23.6% Fibonacci retracement of the February 2018 – October 2019 rally cuts across at 96.56. In addition, a break below the start of the recent uptrend at 95.34 would fully negate the recent rally.

US Dollar Basket Price Chart (January – October 4, 2019)

IG Client Sentiment shows that how traders are positioned in a wide range of assets and markets.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at or via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.