Dovish Fed Drive Rally as Focus Shifts to U.S. NFP

Ultima Markets Daily Market Insights – 4 September 2026

Global financial markets enter Friday on a strong footing following Thursday’s broad relief rally—one of the best daily sessions in a month. Falling U.S. Treasury yields, dovish comments from Federal Reserve officials, and a temporary stabilization in Middle East geopolitical headlines provided much-needed relief to risk assets.

NFP Showdown & Shift in Rate Hike Expectations

As one of the major catalysts yesterday, Federal Reserve Governor Christopher Waller delivered dovish remarks on Thursday, indicating his firm stance to vote to hold rates steady at the upcoming September meeting. This substantially relieved market fears of an immediate interest rate hike. Concurrently, U.S. initial jobless claims rose to 206,000 last week—exceeding market expectations and compounding the earlier weakness seen in the ADP private payrolls report.

Money markets quickly priced down the probability of a September Fed rate hike, with interest rate futures showing the likelihood plunging from 68% down to roughly 50.2%. The sharp drop in rate expectations drove the U.S. Dollar lower while propelling Gold prices higher.

NFP High-Stakes Focus: Market attention today culminates in the August U.S. Non-Farm Payrolls (NFP) report. Traders are seeking labor market clarity following recent mixed signals:

• A cooler-than-expected payrolls print could further extinguish September rate hike bets (currently near 50%).
• A significantly hotter print risks re-igniting rate hike fears, driving bond yields and the Greenback back up.

Dollar, Dollar Pairs & Gold Insights

U.S. Dollar Index: Pullback Below 99.00 Pivot Shifts Bias to Bearish Consolidation

The U.S. Dollar experienced sharp downside pressure after undergoing a strong recovery rally, as Treasury yields pulled back and rate hike bets receded again.

USDX, H4 Chart | Ultima Markets MT5

A pullback in Treasury yields has pushed technical price action back below the pivotal 99.00 support level, which now flips to serve as immediate overhead resistance.

Technically, as long as price action trades beneath 99.00, the Dollar’s short-term technical bias remains tilted toward bearish consolidation, with potential downside risks pointing toward 98.50. Reclaiming 99.00 is required to neutralize near-term selling pressure.

The outcome of tonight’s NFP report is likely to set the tone for the Dollar’s near-term trajectory, depending on how the market reprices the September Fed policy outlook.

GBP/USD: Recovery Setup at 1.3500 Support

Sterling found firm buying support as the Greenback retreated across major currency pairs.

After briefly dipping below 1.3500 earlier last week, prices recovered and extended gains over the past few days, breaking out of the near-term corrective downtrend channel to signal a potential extension of the broader uptrend.

GBPUSD, H2 Chart | Ultima Markets MT5

Technically, the 1.3500 round number now holds as a firm psychological support level. The breakout above the downtrend channel suggests a potential bullish reversal (and continuation on higher timeframes), with immediate support lying at 1.3520.

If buyers can hold the 1.3520 support level, the technical bias favors further upside, though a clear break above 1.3550 is essential to confirm a broader bullish rally.

Fundamentally, a soft U.S. NFP print could provide the needed impetus for an upside breakout.

EUR/USD: Rebounds Off Key Support as Rate Differential Shifts Favor Euro

Similarly, the Euro rebounded off recent lows as the sharp pullback in U.S. rate hike expectations diminished the Greenback’s yield advantage.

EURUSD, H2 Chart | Ultima Markets MT5

Technically, EUR/USD successfully defended its 1.1570 – 1.1600 core support corridor, engineering a clean technical bounce above the 1.1620 high.

The pair is now positioning to test the 1.1600 – 1.1620 support zone on pullbacks; sustaining price action above 1.1600 keeps the immediate recovery structure active heading into the NFP release.

Gold: Surges Above $4,400 Corridor on Dwindling Hike Probabilities

Spot Gold staged a powerful upside rally, forming a sharp V-shaped recovery on the H4 chart by capitalizing on falling yields and a weaker U.S. Dollar.

XAUUSD, H4 Chart | Ultima Markets MT5

With Gold reclaiming and holding firm in a strongly supported consolidation corridor above $4,400, technicals suggest the bias has shifted toward the upside within a bullish reversal setup. $4,500 now poses as immediate overhead resistance.

Traders should watch for a retest of the $4,450 area for dip-buying confirmation, or a decisive bullish breakout above $4,500 to confirm trend continuation for buyers.

Market Summary & Key Highlights Today

The U.S. Non-Farm Payrolls report serves as today’s principal macro catalyst, determining whether the market’s relief rally extends or faces renewed volatility.

Simply put, tonight’s NFP data will serve as the ultimate decider for September rate hike expectations. Clear evidence of labor market softening would leave the Fed with little justification to hike in September—especially given that energy-driven inflation risks have temporarily stabilized—thereby cementing a broader risk-on recovery across global markets.

What to Watch Today:

• U.S. Non-Farm Payrolls & Average Hourly Earnings: Monitor headline employment growth and wage data to confirm labor market softening or trigger hawkish repricing.
• U.S. Dollar Index Floor at 99.00: Watch whether USDX stays capped below 99.00 or reclaims it post-NFP to reignite recovery momentum.
• GBP/USD & EUR/USD Retest Zones: Track whether GBP/USD holds 1.3520 to target 1.3550, and if EUR/USD defends 1.1600–1.1620.
• Gold Upside Confirmation at $4,450 / $4,500: Observe whether Gold holds above $4,400 to test $4,450 for dip buyers or breaks above $4,500 for a bullish trend extension.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.