Weekly Analysis: Markets Find Support in Employment Data as Gold Rebounds and Oil Stays Elevated

Key Takeaways

• US bond yields surged to multi-year highs, with the 10Y reaching 4.82% and 2Y 4.41%, before easing after softer labor data and dovish Fed commentary.
• Fed expectations swung sharply, with September hike odds rising above 60% after Warsh’s hawkish tone before Waller pushed them back toward 50%.
• US-Iran tensions kept oil elevated, with Brent climbing around 7% on the week to nearly $96 as Strait of Hormuz supply risks intensified.
• The US dollar weakened as yields eased, with DXY falling below 99 and ending the week around 0.7% lower.
• USDJPY plunged as the yen strengthened, driven by rising BOJ rate-hike expectations and renewed intervention concerns, with the pair falling toward 155.
• Gold rebounded above $4,500, supported by the weaker dollar and lower yields after Waller’s comments, while geopolitical risks provided additional support.
• Crypto recovered as rate expectations eased, with Bitcoin reclaiming $80,000 while ETF flows remained an important driver of BTC and ETH sentiment.

US bonds and Fed expectations Dominate Market Sentiment

One of the biggest themes was the sharp rise in US Treasury yields at the beginning of the week. The 10-year yield briefly reached 4.818%, its highest level since November 2023, while the 2-year yield climbed to 4.41%, its highest since January 2025. The rise was driven by persistent inflation concerns, higher oil prices, fiscal worries and expectations that the Fed could raise rates in September.

However, the bond market received some relief toward the end of the week after ADP employment data showed private-sector jobs increased by only 38,000 in August, below expectations of 48,000. The weaker labor-market signal helped Treasury yields retreat and slightly reduced expectations for a September rate hike.

The biggest shift came from Fed Governor Christopher Waller, who said he would favor keeping rates unchanged in September if upcoming inflation data continues to show improvement. His comments pushed the market-implied probability of a September hike down from around 63% to roughly 50%, while the 2-year yield fell toward 4.33%.

US-Iran tensions keep oil elevated

Geopolitical tensions remained another major driver. The US and Iran exchanged further attacks, while concerns surrounding the Strait of Hormuz continued to threaten global energy flows.

The escalation pushed oil sharply higher, with Brent approaching $96 per barrel and WTI moving above $91. By the end of the week, Brent was up roughly 7%, while WTI had gained close to 10%, marking oil’s strongest weekly performance since July.

Higher oil prices created a difficult environment for central banks because they increase the risk of renewed inflation. This was particularly important for the Fed, as markets were already debating whether persistent inflation justified another rate hike.

Dollar weakens while yen strengthens

The US dollar initially benefited from higher Treasury yields and rising expectations of a Fed hike, but the trend reversed toward the end of the week as yields declined and Waller’s comments reduced expectations for immediate tightening.

The Dollar Index traded around the 99 level. The biggest move in G10 currencies came from the Japanese yen. USDJPY fell sharply, with the yen strengthening by around 2.9% on the week and briefly moving below 156. The move was driven by expectations of further Bank of Japan tightening, with markets pricing roughly a 75% probability of a September rate hike. BOJ board member Hajime Takata also argued that the central bank should raise rates nimbly in response to inflation rather than follow a fixed schedule.

The yen’s gains also revived speculation about potential Japanese intervention, given the currency’s recent history of official support.

Crypto market

The crypto market was volatile but finished the week on a stronger note after Fed expectations shifted.

Bitcoin initially struggled below $80,000 after the hawkish Fed environment pushed yields and the dollar higher. However, Waller’s dovish comments triggered a sharp recovery, with Bitcoin moving back above $80,000 and briefly approaching $82,000.

Ether also recovered toward $2,500, while the broader crypto market benefited from falling yields and renewed risk appetite. Nevertheless, the latest rally was amplified by short covering, meaning the sustainability of the move will depend on continued ETF inflows and fresh spot demand.

Outlook for next week

The focus now shifts firmly toward the US labor market and inflation expectations. Friday’s August Nonfarm Payrolls report is the week’s key event, with the market looking for confirmation of whether employment is cooling sufficiently to discourage a September rate hike.

A weak payrolls report would reinforce Waller’s dovish position, potentially pushing Treasury yields and the dollar lower while supporting gold, Bitcoin and equities. Conversely, stronger employment and wage data could revive expectations for a September hike, strengthening the dollar and yields and putting pressure on risk assets.

For oil, the key variable remains the US-Iran conflict and the Strait of Hormuz. Further escalation could push Brent decisively above $100, while progress toward de-escalation could remove some of the geopolitical risk premium.

For USD/JPY, the yen’s momentum remains strong, but traders should watch for signs of Japanese intervention as the pair approaches the mid-150s.

Overall, next week’s jobs report could determine whether the recent rise in yields and rate-hike expectations was only temporary or the beginning of a broader tightening repricing. With oil, inflation, the Fed and geopolitics all interconnected, volatility is likely to remain elevated across global markets.

Major Economic Calendar Events for the Upcoming Week

Technical Analysis and Forecast:

Gold Technical Analysis

Gold remains in a strong long-term bullish structure. The recent decline pushed gold below its 5-day and 10-day moving averages, but the latest rebound has brought price back toward the $4,460–$4,470 region.

The immediate resistance is around $4,490–$4,500, followed by the recent high at $4,696. A break above $4,500 would strengthen the recovery and could eventually put the record high back in focus. On the downside, $4,420–$4,430 is the first important support area, followed by $4,320 and the $4,100–$4,120 region. Overall, the broader trend remains bullish, but the recent rejection from $4,696 means gold needs to regain $4,500 to restore strong upside momentum. A sustained break below the 20-day MA would instead suggest that the correction could extend further.

Gold Daily Chart

Source: STARTRADER app | Gold prices recover following weak employment numbers

Brent Technical Analysis

Brent crude continues to display a strong bullish trend, although the market is showing some signs of consolidation after its rapid advance. The moving averages remain positively aligned. Price is currently above the 10-day and 20-day averages and the broader bullish structure is still intact.

The key resistance is the recent $97.40–$98.30 region, with a sustained break above this area potentially opening the way toward $100.00 and beyond. On the downside, $95.70–$96.00 is the first support zone around the short-term moving average, followed by $92.40–$92.70, where the 10-day MA and previous consolidation area are located. As long as Brent remains above $92–$93, the technical bias remains bullish, although the proximity to the $98–$100 psychological resistance zone increases the possibility of profit-taking or a short-term pullback.

Brent Daily Chart

Source: STARTRADER app | Oil prices remain elevated. Brent traders around $97 a barrel

USDJPY Technical Analysis

USDJPY has turned decisively bearish on the daily chart, with the pair falling sharply from the recent high of 163.97 to around 156.35. The moving averages have also turned sharply lower, leaving the current price well below all three and confirming strong downside momentum.

The immediate support is around 155.20–155.30, corresponding to the previous major low of 155.215. A sustained break below this area could expose 154.75 and potentially the 153.50–154.00 region. On the upside, 158.10–159.00 represents the first major resistance zone, followed by 159.60–160.00. Overall, the technical outlook remains strongly bearish, although the magnitude of the recent decline means a short-term corrective rebound cannot be ruled out. Any recovery toward the moving-average cluster is likely to face selling pressure unless USDJPY can reclaim 159.50–160.00.

USDJPY Daily Chart

Source: STARTRADER app | USDJPY faces strong selling pressure on hints of hiking rates from BoJ

S&P 500 Technical Analysis

The S&P 500 remains in a strong broader bullish trend, despite some consolidation around its recent highs. The 5-day and 10-day averages, at approximately 7,703 and 7,701, have also stabilized, suggesting that the recent pullback has not yet damaged the underlying bullish structure.

The key resistance is the 7,825.30 record-high area. A decisive break above this level would signal a continuation of the broader uptrend and open the way toward new highs. On the downside, 7,700–7,720 is the first important support zone, followed by 7,650 and then the 7,530 area. The current structure therefore remains bullish but consolidative. Holding above the 20-day MA would keep the bullish bias intact, while a sustained break below 7,700 would increase the probability of a deeper correction.

S&P 500 Daily Chart

Source: STARTRADER app | S&P 500 rebounds as the index trades near record highs

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