USD Forecast: NFP Revision Weakens Sentiment, CPI to Decide Path
2025-09-10 11:56:03
- US Dollar Nonfarm Payrolls Revision wipes out 911k jobs, unveiling hidden labor market fragility.
- Dollar rebounds into 4H Fair Value Gap as traders await CPI and PPI to confirm direction.
- Bullish above 98 reclaim with targets at 98.20–98.60; bearish if rejected, sliding back toward 97.10–97.00.
US Dollar Nonfarm Payrolls Revision Reveals Hidden Weakness
The Bureau of Labor Statistics delivered a shock in its latest US Dollar Nonfarm Payrolls Revision. Instead of the 147,000 monthly jobs initially reported, actual growth was closer to 71,000. That means the economy added nearly a million fewer jobs between April 2024 and March 2025.
This downward adjustment, the steepest since 2000, rewrites the labor market narrative. A supposedly resilient jobs market now looks fragile, raising doubts about whether the Fed can maintain its higher-for-longer stance.
How the Dollar Reacted After the NFP Revision
The US Dollar Nonfarm Payrolls Revision triggered an immediate sell-off in the greenback as traders recalibrated expectations. But the slide didn’t last long. By the New York session, the dollar steadied, signaling caution.
- Macro backdrop: A weaker jobs base points to slower growth, boosting speculation of earlier rate cuts.
- Flows: The initial USD dip was followed by short-covering, leaving the dollar range-bound.
- Policy risk: The Fed’s credibility rests on inflation data, making CPI and PPI the key catalysts.
CPI and PPI Will Decide the Dollar’s Next Move
The US Dollar Nonfarm Payrolls Revision sets the stage, but inflation will decide the script. Traders now eye PPI for early signals and CPI for the Fed’s main benchmark.
- If CPI/PPI soften: Rate-cut odds rise sharply, dragging the dollar lower.
- If CPI/PPI are hot: Yields rebound, and the dollar could rally hard.
The revision means jobs no longer anchor the dollar’s story - inflation does.
Forex Majors Sentiment After the NFP Revision
- EUR/USD: Gains ground if US inflation cools, but capped if CPI surprises hot.
- USD/JPY: Yield-driven. Softer US inflation drags the pair down; hot data revives upside momentum.
- GBP/USD: Sterling holds upside potential on dollar weakness but remains vulnerable to reversals.
- AUD & NZD: Risk-sensitive currencies that thrive if USD softens, but fade if inflation pressures persist.
- CAD: Supported by oil, but US inflation will dominate USDCAD’s direction.
- CHF: Already strong, and the US Dollar Nonfarm Payrolls Revision reinforces CHF demand if USD weakens.
Technical Outlook on the US Dollar (DXY)
Before: The Selloff and FVG Formation
Ahead of the US Dollar Nonfarm Payrolls Revision, DXY extended lower, breaking through prior demand and leaving behind a clean 4H Fair Value Gap around 97.782–97.933. This created a pocket where sellers had previously controlled momentum. At the time, the bias was skewed bearish - unless the dollar could stage a recovery into that imbalance.
After: Rebound into the 4H FVG
Now, price is rebounding directly into the 4H FVG, testing whether this zone acts as resistance or a launchpad. The reaction here is pivotal:
- If buyers absorb supply and reclaim this imbalance, the dollar could extend higher toward 98.20–98.60, aligning with the bullish scenario mapped earlier.
- If sellers defend the gap, rejection could send DXY back toward 97.30, and if that floor fails, toward 97.10–97.00 - the clean liquidity levels visible below.
Bullish Scenario: FVG Reclaim and Continuation
- Trigger: A sustained close above the 98 zone and the marked bearish H4 FVG.
- Follow-through: Buyers push toward 98.20, then 98.60 (next structural pivot).
- Narrative: Reclaiming the 4H FVG signals the dollar has shaken off the revision-driven dip, with CPI/PPI providing momentum for extension.
Bearish Scenario: FVG Rejection and Breakdown
- Trigger: Sharp rejection from the 97.782–97.933 FVG zone.
- Follow-through: Price rotates lower toward 97.30, then sweeps liquidity at 97.10–97.00.
- Narrative: A failed rebound shows sellers still in control, with the revision anchoring sentiment and inflation releases potentially fueling further downside.
Final Thoughts
The US Dollar Nonfarm Payrolls Revision exposed a weaker jobs market than previously thought, stripping away nearly a million payrolls and casting doubt on the strength of U.S. labor momentum. While the dollar initially stumbled, it has since rebounded into a key 4H Fair Value Gap, where the next directional move will be decided.
From here, the market’s focus is squarely on CPI and PPI releases. Inflation data will either confirm the labor-led weakness and push the dollar lower or re-ignite yields and extend the rebound higher. Majors such as EUR, GBP, and CHF stand ready to benefit from a softer USD, while USD/JPY and commodity currencies will take their cue from yields and risk appetite.
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