As expected, we saw another big revision in US jobs data, which doesn’t bode well for the US dollar forecast. The Bureau of Labor Statistics (BLS) revised its US annual benchmark payrolls by a record -911K for March 2025. This was both more than expected and a record. The news saw gold hit yet another record high, with the metal extending its gains to more than 6% so far in September. The major currency pairs didn’t move too much in immediate response, perhaps because a big revision was to be expected.
Risk-On Sentiment Ahead of US CPI
Meanwhile, US stock averages were holding near recent highs. Markets overall remain broadly in risk-on mode ahead of the all-important US CPI release on Thursday, with the US dollar under sustained pressure as rate-cut expectations build. This backdrop is keeping equity indices and risk assets supported, while traders position for a potential cut and more dovish signals from the Federal Reserve next week.
Weaker dollar forecast underpins GBP/USD
Sterling is holding firm, benefitting from both stronger-than-expected UK data and sustained dollar weakness. The coming days bring a raft of key releases — including UK GDP and industrial production — while across the Atlantic, US CPI and PPI will be in focus.
At the time of writing, the GBP/USD was testing resistance between 1.3540 and 1.3588, an area that has held several times in recent weeks. A breakout above this zone would likely pave the way for a continuation towards the July high at 1.3788. The market is also pricing in a Fed rate cut next week, with at least one — and possibly two — additional cuts by year-end depending on the data.
EUR/USD: Clears the way higher
The EUR/USD chart has broken above its short-term bearish trend line, opening the door to a continuation towards the July peak of 1.1830 — the next key level on the topside. Support now rests at 1.1700, which previously acted as resistance, with a further support zone seen between 1.1560 and 1.1620. Crucially, the pair remains above its rising trend line, keeping the technical bias skewed to the upside, all thanks to a weaker US dollar forecast.
AUD/USD poised for further gains
The Australian dollar remains one of the more interesting pairs to watch in this risk-on environment. Price recently reclaimed the 200-day moving average but chose to consolidate rather than extend sharply higher, repeatedly retesting the support zone between 0.6370 and 0.6430.
The latest rally pushed through 0.6560 to create a short-term higher high, with the July peak at 0.6625 now the immediate upside target. A clear break above that level could open the way towards round-number handles such as 0.67, 0.68, and beyond, with the September 2024 high at 0.6942 the next major objective if momentum holds. The 0.6560 level now acts as the first layer of support. Below that we have 0.6500.
Dollar forecast hinges on incoming US data
Much will depend on upcoming US economic releases. Should the data continue to support the case for rate cuts, weakness in US dollar forecast is likely to persist, underpinning GBP/USD, EUR/USD, and AUD/USD and keeping risk sentiment buoyant. At least that is what I expect to see anyway.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
