Global Market Update – September 8, 2025

EUR/USD, Weak U.S. Jobs Data, Inflation Trends, and Political Uncertainty

 

Introduction
Monday, September 8, 2025, kicked off with market volatility around the world. Traders and investors are grappling with mixed U.S. labor data, easing inflation globally from developed economies, and political uncertainty related to Japan and France. At the same time, commodities from oil and gold have rallied, and equities are holding out hope that the U.S. Federal Reserve may step in with monetary policy accommodation.
All eyes are on EUR/USD, the most traded currency pair in the world. The euro has surged violating key resistance at 1.1720 after last Thursday’s disappointing Non-Farm Payroll (NFP) data showed signs of weakness in the U.S. economy. Market participants shifted their sentiments, increasing the chances the Fed may have to cut sooner and deeper than they anticipated.
In this lengthy market report, we will analyse today’s medium- to longer-term barriers in detail including the fundamental reasons behind the drivers of today’s action, the technical story behind EUR/USD, a higher-level view of how equities and commodities may be affected, and the political risks that investors will be pondering.

1. The NFP Shock: Dollar Loses Ground

The August U.S. jobs report was the biggest story of the week. Economists expected near 220,000 jobs added but were met with a disappointing 145,000. Unemployment increased to 4.3%, and wage growth slowed.

This data points to a few takeaways:

Economic Momentum Slowing – The U.S. labor market had been shockingly strong over the past few years, but we can see cracks emerging. Slowing job creation shows us businesses are pulling back.

Federal Reserve Pressure – Weak jobs and (previously) moderating inflation puts the Fed in a bind. The markets are pricing in a practically guarantee 25 basis point cut, with 40% chance of 50 bps.

Dollar Weakness – The markets sold the dollar aggressively after the jobs report, and the U.S. Dollar Index (DXY) dropped to $97.70, its nearest support.

For EUR/USD, this transition mark is important:

EUR/USD broke above 1.1720, which had restrained any potential upward movement for weeks.

Market participants are now looking toward the historical support (new resistance) area of 1.1790 – 1.1810 as the next presumed area of upside movement.

Market bias is firmly bullish, barring any surprises on economic data from the U.S.

Historical Context

Weak NFP shocks have historically lead to prolonged upside moves in EUR/USD. Notable examples:

June 2016 was a weak NFP report that strengthened EUR/USD for three consecutive

2. Inflation Trends: OECD and Eurozone

Inflation is another big topic today. The OECD released data showing a yo-y rise in consumer prices of 4.1% for July, a step down from June’s 4.2%. While not huge, this is a sign of a slowing global rate of inflation (the OECD says global inflation has peaked).

In the Eurozone, the Harmonized Index of Consumer Prices(HICP) came in at 2.1%. This is slightly above the ECB’s mandate, but it shows stability compared to over 5% last year.

Central Bank Implications

Federal Reserve – Weak jobs + cooling inflation is a strong argument for rate cuts. Aggressive rate cuts are now very possible.
ECB – Inflation below 2% means the ECB will have little reason to further hike rates. The stability in inflation gives the euro a much better chance vs. dollar.
Global Outlook – If inflation cools while growth also slows, more central banks can begin to pivot towards stimulus which will be supportive for risk assets, but also cause relative currency weaknesses, particularly vs. the euro.

The Implications of Inflation for EUR/USD

Currency values often reflect not just relative growth, but also relative expectations about monetary policy when the FOMC is dovish and the ECB is on hold the balance swings favourably for the euro. Currency traders are privy to this imbalance, which explains the strong bid for EUR/USD since Friday.

3. Technical Analysis of EUR/USD

EUR/USD traders are now watching for significant technical reversal levels to prove this bullish breakout is for real!

Key Levels

Resistance; 1.1720 (now broken) followed by 1.1790 and then 1.1810

Support; 1.1700 (short term) then 1.1665 (previous swing low)

Dollar Index: 97.70 is important support and any break lower will hasten dollar losses.

Price action analysis

On the 1 hour chart, EUR/USD displays a strong push with bullish candle after bullish candle and only small retracement.

On the daily chart, momentum indicators (RSI, MACD) obviously support a bullish bias, but the RSI is in the overbought zone, so it is possible to see some small pullbacks in EUR/USD.

Look at the Liquidity zones; in the rally on Friday, there was a liquidity pocket that was untouched near the 1.1680 price zone following Friday’s hike. If sellers regain control, then we could see price slip back down towards that zone before continuing higher.

Trader psychology

Retail traders are chasing the bullish breakout, pulling in even more euro longs.

Institutional traders appear to be reticent to chase, waiting until the price confirms breaking 1.1790 before adding to trades.

A “false breakout” is possible if there is a change in dollar sentiment.

At this time, everything appears to align, technically and fundamentally speaking: EUR/USD has room to run.

4. Global Political Developments

Japan – Prime Minister Resigns

The Japanese Prime Minister (Fumio Ishiba) has resigned very suddenly due to what appears to be infighting within the ruling party. This surprise situation confused the Tokyo markets causing the yen to decline against the U.S. dollar and raised demand for gold as a safe haven. The political gap now leaves uncertainty regarding Japan’s economic policies going forward.

France – No Confidence Vote for PM Bayrou

In France, Prime Minister François Bayrou is voting on a no confidence bill. Should he fail to pass the confidence vote it will create a dramatic political uncertainty in one of Europe’s largest economies. As for the euro, there has not been much immediate impact as a result of political turmoil, but any prolonged uncertainty may eventually weigh on market sentiment.

Geopolitical Context

– China’s Exports: Recent data indicates that China’s exports are falling dramatically to the United States amid trade tensions.
– OPEC+: Oil policy is becoming heavily influenced by geopolitics and specifically the developing tensions in the Middle East related to the Russia-Ukraine conflict.
– U.S. Election Season: Political uncertainty in the United States is another potential source of market uncertainty. Markets have always have difficulty with elections in the U.S. and there is a growing sensitivity to election uncertainty.

All of which serves as a reminder to investors that politics remains a considerable trigger for global markets.

5. Highlights of Commodities: Gold and Oil
Gold – Safe Haven Boost

Gold’s move above $3600/oz is arguably one of the most notable moves of the day, and is being attributed to a variety of factors including:

– U.S. bond yields continuing to fall, which diminishes the opportunity cost of holding gold
– Political uncertainty in Japan and France is driving safe-haven demand.
– Central bank diversification, with gold being included in emerging market central banks’ reserve policy.

If the Fed’s cuts turn out to be deeper than expected, gold could potentially make a move towards $3700-$3800 in the coming weeks.

Oil – OPEC+ Continues to Stifle Supply as Current Demand Fears are Maintained
Oil was able to squeeze higher today with OPEC+ announcing they would hold off on their production increase. This decision reflects OPEC’s caution, balancing the need for price stability against potential demand destruction to the downside.

The rising oil prices also complicate inflation matters. OECD data points to cooler overall price movement, but energy prices could continue to inspire inflationary pressures if crude persists at elevated prices.

6. Equities and Broader Market Readings

Equities had positive entry into the new week, as Wall Street futures were noted trading higher, with investors once again basing investment decisions on the notion that Fed easing helps corporate earnings and valuations.

At the same time gold’s move higher confirms the underlying caution that is occurring. So we could be in a bit of a ‘dual’-market condition, as equities are rising further and safe havens are also rallying, as investors are at least hedging a bit of their bets.

Stocks: Enjoying the rate cut optimism.

Bonds: As yields move SHIFT_ lower strike rates negatively.

7. Potential Future Scenarios:

There are many courses ahead, each with different market implications:

Aggressive Fed Cuts – If the Fed moves quickly with a 50 bps cut or suggests multiple cuts, EUR/USD could surge beyond 1.18 or higher, and gold could make new highs.

Data Surprises to the Upside – If the U.S. data (retail sales or CPI) comes in better than expected, the dollar could recover significantly and force EUR/USD to fall below 1.17.

Political Escalation in France – if a confidence vote fails on the eastern side of market, it would pressure the euro, when the fundamentals will better support it.

Energy Shock – If oil continues to rise, uncertainty around inflation, which could make the central banks take actions less kindly on easing policies could spark uncertainty in many asset classes.

Conclusion

September 8, 2025, is shaping up to be a pivotal day for global markets. Weak U.S. jobs data, stabilizing Eurozone inflation, and political turmoil in Japan and France are combining to drive volatility.

For EUR/USD, the outlook is bullish in the near term, with the pair breaking past 1.1720 and eyeing 1.1790–1.1810. The fundamental backdrop—dovish Fed expectations versus stable ECB policy—supports euro strength.

Beyond forex, gold’s rally above $3,600 underscores safe-haven demand, while oil prices highlight supply risks. Equities are climbing on Fed optimism, but the market remains fragile and sensitive to shocks.

In short, the balance of risks points toward further dollar weakness and euro gains. But traders should stay vigilant: in today’s interconnected world, a single data release or political headline can shift the narrative overnight.