FX.co ★ EUR/USD: The Shutdown and Non-Farm Payrolls

The EUR/USD pair has been trading in a narrow price range of 1.1530–1.1590 for the second consecutive day (the lower boundary of the Kumo cloud on h4 – the middle line of the Bollinger Bands indicator on D1). Traders are reluctant to open large positions ahead of the shutdown's conclusion. The very fact of the resumption of U.S. government operations interests the market only to a certain extent, as participants are preparing for the release of key macroeconomic data that could provoke significant volatility in both the EUR/USD pair and other dollar-denominated pairs.

Primarily, investors are focused on the Non-Farm Payrolls (NFP). If it weren't for the shutdown, we would already have the official labor market statistics for September and October. The question arises: how quickly can the BLS (Bureau of Labor Statistics) gather and publish data from previous months? It is clear that after the resumption of government work, all attention will be on the NFP, which will determine the direction of EUR/USD's future movement.

Based on previous shutdowns, one can assume that if the BLS's funding is restored this week, the Bureau will publish the September report 5 to 10 days after reopening. The 2025 shutdown began on October 1, whereas publication of September data was scheduled for October 3; therefore, one can assume that most of the work had already been completed by then. However, the October report will likely be released 1.5 to 2 weeks after the September report. Hence, the September Non-Farm Payrolls could be published next Friday, while October's will likely be released in early December.

It is also important to consider that the shutdown affects not only the timing of release but also the quality and completeness of the data. This means that the October report will almost certainly contain distortions due to incomplete data and shifts in seasonal adjustments. Again, based on previous shutdowns, one can assume that estimation errors will range from 50,000 to 100,000 jobs, and the unemployment rate may shift by 0.1 percentage points. Unfortunately, a more reliable picture will only be available to the BLS after a revision of the October data, meaning in January.

However, this does not mean that the market will ignore the Non-Farm Payrolls. Especially since the September data will be released, which is unaffected by the shutdown. Recall that according to preliminary forecasts, unemployment in September is expected to remain at August's level (4.3%), while the number of jobs in the non-farm sector is anticipated to grow by only 50,000, following a 22,000 increase in the previous month. The average hourly earning growth rate should remain at the August level of 3.7%.

As we can see, the forecast is quite weak, but given the disappointing ADP report, such a result may paradoxically support the U.S. currency. Note that according to unofficial data, the number of jobs in the private sector decreased by 30,000 in September. Although the ADP report does not cover the public sector and some other non-farm industries, this result is a worrying signal, suggesting that the September Non-Farm Payrolls may also be in the red zone.

If the official data confirms the "worst-case scenarios," discussions about the prospects for the Fed to cut interest rates at the December meeting will resurface. Currently, the probability of a 25-basis-point cut in December is estimated at 63%, making it essentially a "50/50" scenario, but weak Non-Farm Payrolls will tilt the balance toward a dovish stance, putting additional pressure on the dollar.

This explains the "sideways" movement we observe in the EUR/USD pair. Traders are reluctant to open large positions ahead of significant fundamental events.

The good news is that we do not have to wait long: just yesterday, the Senate approved a bill aimed at unblocking the work of the U.S. government—if it is supported by House members and then signed by the President. The compromise solution was supported by nearly all Republicans (except one) and eight Democrats. Forty senators opposed it. The bill has now been passed to the House of Representatives, where its fate will be decided.

It is worth noting that earlier, some House representatives (so-called ultra-right Trump supporters) stated that they would not support the amended bill, which would include compromise provisions. Many Democrats in the House also criticized the agreement reached in the Senate, and the majority of them will likely vote against the bill.

However, yesterday, House Speaker Mike Johnson, a Republican, assured that there would be enough votes to pass the compromise document. According to him, lawmakers have been given 36 hours to return to Washington.

Unlike the Senate, where overcoming the so-called filibuster requires 60 votes (which the Republicans do not have), the House requires only a simple majority, which the Republicans possess. If the White House mobilizes Republican legislators, the U.S. government could resume operations by the end of this week. Until then, the EUR/USD pair is likely to trade within a narrow range of 1.1530–1.1590, alternately rebounding between the upper and lower boundaries.