On the weakening labor data
The U.S. unemployment rate has climbed to 4.6%, the highest level in the past four years, signaling a clear cooling in the labor market.
However, the latest Fed dot plot for 2026 still projects policy rates around 3.4%–3.5%, down from the current 3.75%–4.0% range. This implies that the Fed is expecting only a single 25 bps rate cut in 2026, which reflects a relatively hawkish stance.
This creates a growing contradiction. With unemployment now at a four-year high, recession risks are rising, and the labor data is increasingly at odds with the Fed’s projected path. If economic weakness persists, the Fed may be forced to reassess its outlook in 2026, potentially delivering 2–3 rate cuts instead of just one.
Short-term risk:
If the market interprets the current data as not bad enough and the Fed remains rigidly hawkish, BTC could retest the 80K–84K zone.
On the other hand, weaker NFP data is negative for the USD, and gold is likely to see a relief bounce under these conditions.
Overall, the tension between labor market weakness and Fed policy guidance is building — and volatility across risk assets is likely to remain elevated.
