The upcoming week sits on the border of September and October, so a full macroeconomic program awaits. The release palette is indeed diverse: we will learn the August reading of the core PCE index, the final estimate of US Q2 GDP, the ISM manufacturing index for September, and key US labor-market data (JOLTS, ADP, NFP). On the other side of the Atlantic, reports on inflation growth in Germany and the entire eurozone will be published. There is no doubt that these releases will provoke strong volatility in EUR/USD — the question is only in whose favor: buyers or sellers.

Market of US Labor

The first most significant report of the week for the greenback will be JOLTS, published on Tuesday. In July the number of job openings in the US was 7.27 million. The indicator has been falling for the third month in a row, and a downward trend is also expected in August. Most experts expect openings to fall to 7.230 million. Such a result alone will not be catastrophic for the greenback, but further cooling in labor demand will increase doubts about the resilience of the US labor market. In other words, if the report comes in at or below forecasts, it will ring a "warning bell" that could shake the US currency's position.

On Wednesday, ADP will take the baton. In August, the private sector created only 38,000 jobs after 44,000 in July and 98,000 in June. Thus, the private sector has recorded a downward trend for three months. However, a small rise to 70,000 jobs is expected in September. The expected result (as with any figure below 100k) would signal weakness in the US private sector, but given the downward trend in previous months, even such a gain could provide background support for the dollar. If the report falls below the 38k mark, the greenback will come under significant pressure, as that would indicate further deterioration in private-sector employment and heighten concerns about the overall US labor market.

Finally, on Friday, one of the week's main reports for EUR/USD will be published — NFP. Recall that the previous — August — report offset July's slump. In August, the US economy unexpectedly created 162,000 jobs after a 20,000 gain in July (initially reported as a 23k decline). Unemployment remained at 4.1%, the labor-force participation rate was 61.6% (up from 61.4%), and average hourly earnings rose 0.3% month-on-month and 3.1% year-on-year.

Most analysts expect the US economy to create 98,000 jobs in September. The unemployment rate is expected to remain at 4.1%, and wage growth is forecast to stay at August's pace.

If JOLTS and ADP can provoke a market reaction "in the moment," September's NFP can change the trajectory of monetary-policy expectations — at least regarding the Federal Reserve's October meeting. As of today, the probability of a rate hike in October is priced at 65–70% (per CME FedWatch), while December is about 50%. A strong NFP report would cement the hawkish scenario and put significant pressure on EUR/USD. But if the release comes in the red, dollar positions across the market would weaken, as traders would likely revise expectations for further tightening that are currently focused on December.

US Inflation, GDP and ISM

On Wednesday, the US core PCE index — the Fed's most important inflation gauge — will be published. In July, Core PCE rose 0.2% month-on-month and 3.3% year-on-year. Forecasts call for an acceleration in August — to 0.3% m/m and 3.4% y/y. Higher readings of this indicator would strongly support the dollar, since a sustained pick-up in core inflation is a major argument for tighter monetary policy.

Also on Wednesday, the third (final) estimate of US Q2 GDP will be released after the second estimate showed 1.5% annualized growth (down from 2.1% in Q1). The consensus does not expect a revision. Because this is the final estimate, its market impact is usually limited. Nevertheless, any revision can trigger volatility — either for or against the dollar, depending on the tone of the release.

Another important dollar- sensitive macro release comes Thursday — the ISM manufacturing index. It edged down to 54.6 in August but remained in solid expansion. Most forecasters expect the index to rise to 55.0 in September. The price component is expected to accelerate to 72.0 (from 71.1). A combination of strong manufacturing activity and rising price pressure would provide substantial support to the greenback.

European Inflation

On Wednesday preliminary inflation data for Germany will be published, and on Friday the preliminary inflation estimate for the eurozone will be released. In August German inflation accelerated to 2.9% from 2.8%. In September further growth is expected — this time to 3.1%. In the eurozone, headline inflation jumped to 3.3% from July's 2.9% (mainly due to energy), while core inflation, by contrast, slowed to 2.4%.

Forecasts call for the headline rate to accelerate to 3.7% in September, and for the core index to rise to 2.5%.

The September report should be viewed in light of the latest European Central Bank meeting, after which the central bank raised rates by 25 basis points and revised inflation forecasts upward. At the same time, the central bank assessed the prospects for further tightening cautiously, tying subsequent steps to the dynamics of key macro indicators. Therefore, a stronger September inflation print could work in the euro's favor and, accordingly, support EUR/USD buyers.

Conclusions

The coming week could be decisive for EUR/USD's medium-term dynamics. On one hand, strong readings for Core PCE, ISM and the labor market could reinforce expectations of further Fed tightening, strengthening the dollar. On the other hand, accelerating inflation in Germany and — especially — in the eurozone could restore support for the euro, particularly against the backdrop of hawkish ECB comments.

For now, the fundamental backdrop favors the greenback: the US economy is showing resilience, and market participants are already pricing in the possibility of additional rate hikes. If PCE, ISM, and especially NFP come in stronger than forecasts, EUR/USD sellers will have a chance to retest support at 1.1360 and then 1.1330. But weak US data combined with accelerating European inflation could trigger a larger correction toward the 1.1430 target and beyond.