USD faces pressure ahead of May NFP - Goldman forecasts 125k jobs

USD is trading cautiously ahead of Friday's critical Non-Farm Payrolls release, with Goldman Sachs projecting a sharp deceleration to 125k jobs added in May versus consensus expectations of 185k. The investment bank anticipates the unemployment rate to tick higher to 4.2% from 3.9%, while wage growth is expected to moderate to 0.3% m/m. Goldman specifically warns that federal government workforce reductions could weigh on headline figures, potentially creating additional downside risk to their already below-consensus forecast. This softer employment outlook could reinforce market expectations for Fed rate cuts later in 2024, potentially weighing on dollar strength. Major USD pairs remain range-bound in Asian trading, with traders reluctant to take significant positions before the 8:30 AM ET data release. A miss on payrolls below 100k could trigger sharp dollar selling across the board, while a surprise beat above 200k would likely support USD recovery.