Nonfarm payrolls in the US fell by 23,000 in July, while economists had been expecting an increase in the 83,000–97,500 range, according to Bureau of Labor Statistics data. The unemployment rate dipped to 4.1% versus the 4.2% that had been expected, and the number of unemployed stood at 6.9 million, little changed both month?over?month and year?over?year. The result was worse even than the most pessimistic bank forecasts, whose lower bound was 65,000, making July's report one of the most notable disappointments in recent months.

Even more significant for gauging, the true state of the labor market was the scale of the revisions. May was revised down by 66,000, from +129,000 to +63,000, and June was revised down by 37,000, from +57,000 to +20,000. With these adjustments, employment for May and June combined is 103,000 lower than previously reported. This is the second consecutive large downward revision, reinforcing a picture of persistently overstated hiring in prior reports. For comparison, the average monthly gain over the preceding 12 months was 34,000, so July's decline stands out even against that weakened trend.

The breakdown of job losses points to specific pain points. Employment in public education plunged by 50,000 after nearly zero net change over the prior 12 months. Retail lost 19,000 jobs, with supermarkets and other general?merchandise stores down 21,000 and gasoline stations down 5,000, while sporting?goods, hobby, musical?instrument, book and other specialty stores added 10,000 positions. The financial sector shed 14,000 jobs.

The one durable support for the labor market remains healthcare, which added 22,000 jobs, although that is noticeably slower than its average monthly gain of 36,000 over the previous 12 months.

A notable paradox is the falling unemployment rate alongside worsening employment. The labor force participation rate was 61.4% and the employment-to-population ratio 58.9%; since January, participation is down 0.7 percentage point, and the employment?to?population ratio is down 0.5 point. It is people leaving the labor force, not rising hiring, that is keeping unemployment low. The number on temporary layoff jumped by 153,000 to 921,000, a worrying signal, while the number permanently unemployed changed little, remaining at 1.7 million.

Wage dynamics remain muted, which eases some inflationary pressure on the Federal Reserve. Average hourly earnings for all private nonfarm employees were $37.62, up only 2 cents for the month, and up 3.2% year-over-year.

Taken together, these data sharply shift the balance of arguments within the Fed, where July's policy vote was split 9–3 in favor of holding the funds rate. Negative payroll dynamics, large downward revisions, the jump in temporary layoffs, and sliding participation rates confirm the concerns of economists who had expected a sharper deterioration and had priced in up to three rate cuts by January 2027. Muted 3.2% annual wage growth further weakens the position of the three hawks who had argued for an immediate rate increase.

Technical picture on EUR/USD

Buyers now need to focus on taking the 1.1592 level. Only that would allow a target test of 1.1620. From there, a move to 1.1645 is possible, but doing so without support from large players will be difficult. On a decline, I expect large buyers to act only around 1.1541. If no one shows up there, it would be better to wait for a new low at 1.1505 or to open long positions from 1.1480.

Technical picture on GBP/USD

Pound buyers need to take the nearest resistance at 1.3503. Only then can they target 1.3540, above which further gains will be difficult. The furthest upside target is around 1.3585. On the downside, bears will try to seize control at 1.3455. If they succeed, a break of that range would seriously damage bulls and push GBP/USD toward 1.3419 with the prospect of extending to 1.3393.