Forex News

• US Dollar Index slides to a two-week low after disappointing US Nonfarm Payrolls data.
• Markets lower expectations for a September Fed rate hike after the NFP miss.
• Fed's Daly says inflation risks remain while policy stays slightly restrictive.

The US Dollar Index (DXY) trades under pressure on Thursday as weaker-than-expected US Nonfarm Payrolls (NFP) data dent expectations of a near-term Federal Reserve (Fed) rate hike.

The index, which tracks the Greenback's value against a basket of six major currencies, trades around 100.88 at the time of writing after hitting a two-week low of 100.56 earlier in the American session.

The Greenback was also weighed down by a sharp rebound in the Japanese Yen (JPY), with traders speculating that Japanese authorities may have intervened in the foreign exchange market after USD/JPY hit a 40-year high earlier this week. Japan's Finance Ministry declined to comment on the Yen's sudden surge.

Data released by the US Bureau of Labor Statistics (BLS) showed the US economy added just 57K jobs in June, well below market expectations of 110K. Meanwhile, May's payrolls were revised down to 129K from the previously reported 172K.

Not all of the Employment report was weak. The Unemployment Rate unexpectedly eased to 4.2% from 4.3%, while Average Hourly Earnings rose 0.3% MoM and 3.5% YoY in June, matching market expectations.

Traders responded by trimming September Fed rate hike bets, with the probability of a rate increase falling to 53% from 63% before the data release, according to the CME FedWatch Tool.

Still, the US Dollar may not see much further downside as markets expect the Fed could raise interest rates later this year to bring inflation back to its 2% target

Meanwhile, uncertainty over a final US-Iran peace deal continues to support demand for the safe-haven US Dollar. Indirect talks between the two sides concluded in Doha, with Qatari mediators reporting "positive progress," although no significant breakthrough was announced.

However, lower Oil prices in recent weeks have helped ease inflation concerns, reducing some of the pressure on the Fed to tighten monetary policy aggressively.

San Francisco Fed President Mary Daly said on Thursday, "There is a scenario where the Fed has to fight inflation; there's also a scenario where growth doesn't continue." She also said, "Fed policy is still in a slightly restrictive position."

• DJIA carved out a fresh intraday record on Thursday despite a June payrolls print that missed by nearly half.
• The advance looked like rotation out of semiconductors rather than a broad-based rally.
• Rate markets barely touched their Fed hike pricing, keeping a July hold as the base case.

A June jobs report that undershot expectations by nearly half sent the Dow Jones Industrial Average (DJIA) to a fresh intraday record on Thursday, which reads like a contradiction until you look at what actually moved. The blue-chip index added about 0.6% to a new all-time high while the Nasdaq Composite slid and the S&P 500 sat flat. That split is the whole story, because this was rotation rather than a broad wave of buying.

The chips are where the money left

The tell sat in the semiconductor complex, which fell for a second straight session and dragged the tech-heavy benchmarks down with it. Chip names shed several percent as a group, with a pair of equipment makers off close to 8% and heavyweights like Nvidia and Micron following them lower. The read from the desk is a revaluation of the artificial intelligence trade itself rather than simple profit-taking; if companies grow more sensitive to the cost of computing power, the whole capital-spending story that justified those valuations comes up for review. Capital did not leave the market on Thursday; it changed neighbourhoods, and the Dow's older and cheaper constituents took the inflow.

A payrolls miss the Fed can shrug off

The June print showed the economy adding just 57K jobs, well shy of the 115K consensus, the sort of number that would normally send traders reaching for rate cuts. It did not play out that way, and the reasons matter. The unemployment rate actually fell to 4.2% against an expected hold at 4.3%, so the household survey told a firmer story than the payrolls headline, and a Federal Reserve (Fed) now led by a chair who treats first-print jobs data as little more than noise until the third revision was never going to lurch on a single soft release.

Rate futures barely flinched on the hiking path even as the headline miss flashed dovish. The odds of a hold at the late-July meeting firmed toward 82%, but that was already the base case, and the pricing further out still leans toward the Fed grinding rates higher rather than cutting them. A labour market softening at the margin, set against a Crude Oil market that keeps sliding and pulling headline inflation lower, is exactly the mix that lets a hawkish Fed sit on its hands without losing face. The two-year Treasury yield eased on the day, which is the market's polite way of saying no hike next month, not cuts are coming.

Records printed on a skeleton crew

The record also deserves an asterisk for when it landed. Thursday closed the last full session of a holiday-shortened week, with US markets shut Friday for Independence Day, and thin liquidity tends to exaggerate moves in both directions. The tape reopens into a heavier slate, with the Institute for Supply Management (ISM) services survey due Monday and the minutes from the Federal Open Market Committee (FOMC) meeting in June landing Wednesday, the latter the first real look at how split the committee was behind its hawkish hold.

Levels to watch

Resistance: The immediate hurdle is the 53,000 handle sitting just above Thursday's high, a level the index has never traded through and the obvious magnet if the rotation bid persists. Clear it on real volume and there is no overhead supply worth naming, which is the double-edged nature of blue-sky territory.

Support: First support sits at 52,000, with the more meaningful shelf down at 51,000 where the index consolidated through late June. Below that, the 50-period Exponential Moving Average (EMA) near 50,700 has tracked this entire advance and marks the line between a healthy pullback and something that needs explaining; the 200-period EMA down near 48,400 is the deeper backstop.

Bias: The path of least resistance points higher, with a caveat about how the index is getting there. The trend is intact and momentum still has headroom, with the daily Stochastic Relative Strength Index (Stoch RSI) elevated near 72 rather than pinned at an overbought extreme, so there is no exhaustion signal yet. The catch is that this leg is being carried by rotation out of technology rather than broad participation, which earns the record respect but not full conviction until the rest of the tape joins in. The stance stays long while price holds above 52,000 and the 50 EMA, and a daily close back below that shelf would signal that the rotation trade has run its course.

Dow Jones daily chart

BNY’s Geoff Yu notes that clients have largely capitulated on Japanese Yen (JPY) and South Korean Won (KRW) longs as these currencies stay weak versus US Dollar (USD) and Chinese Yuan (CNY). He argues that fundamentals offer limited justification for further weakness and that U.S. strategic considerations around AI (Artificial intelligence) supply chains could trigger a policy push. Such a shift might catalyze a material strengthening in JPY, KRW and Taiwan Dollar (TWD).

Capitulation sets stage for upside risk

"China’s silence on JPY, KRW and TWD valuations is as surprising as the lack of U.S. pushback. Although Treasury Secretary Scott Bessent highlighted in January that the KRW wasn’t trading in line with fundamentals, the KRW has weakened further but hasn’t generated much pushback. The decline in oil prices means the fundamental justification from a balance-of-payments perspective is also much weaker."

"iFlow indicates that any residual positioning in JPY and KRW longs by cross-border clients has collapsed. Intervention clearly isn’t designed to strengthen currencies structurally, while potential rate hikes by central banks in the region will also be soft relative to developed market peers outside of Asia."

"Fed Chair Kevin Warsh’s comments yesterday weren’t seen as excessively hawkish, so the USD carry angle is weakening as well as a driver."

"If the U.S. can’t make an argument for USD to adjust versus JPY, KRW and TWD on a fundamentals basis, geopolitics and strategy could be the more relevant angle. Current weakness in these currencies versus the USD and CNY is dampening the cost of purchases. The U.S. may take a view on whether this aligns with strategic priorities in AI."

"A new push, either openly or behind the scenes, could change behavior, especially with JPY and KRW where markets are now positioned the other way. This means that a sudden adjustment could pay off in material strength for JPY, KRW and TWD. Signaling through the semiannual currency report is another option."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• AUD/USD climbed as the USD weakened after softer-than-expected US labor market data, with investors trimming expectations for further Fed tightening.
• US NFP disappointed sharply, adding only 57,000 jobs in June versus expectations near 110,000.
• Wages and jobless claims showed resilience, with Average Hourly Earnings rising 0.3% MoM and Initial Jobless Claims falling to 215,000, suggesting labor demand is cooling but not collapsing.

The AUD/USD pair climbed near the 0.6930 area on Thursday as the US Dollar (USD) came under pressure following softer-than-expected United States (US) labor market data. The pair advanced as investors trimmed expectations for further Federal Reserve (Fed) tightening, although weaker Australian trade figures limited the Aussie’s upside.

The US Nonfarm Payrolls (NFP) report showed that the US economy added only 57,000 jobs in June, well below expectations of around 110,000. May’s figure was also revised lower to 129,000 from the previously reported 172,000, reinforcing signs that hiring momentum is cooling. Despite the weaker-than-expected headline, the Unemployment Rate unexpectedly fell to 4.2% from 4.3%, although the decline was partly offset by a drop in labor force participation to 61.5%.

Wage data remained steady with Average Hourly Earnings rising 0.3% MoM in June to $37.64, while annual wage growth stood at 3.5%. The average workweek was unchanged at 34.3 hours, suggesting that labor demand is slowing but not collapsing.

Other labor data also pointed to a resilient jobs market. Initial Jobless Claims fell to 215,000 in the week ending June 27, below expectations, while Continuing Claims increased slightly to 1.814 million. The figures suggest layoffs remain contained, even as companies appear more cautious about hiring.

The softer payrolls report pushed US Treasury yields lower and weighed on the Greenback, with the US Dollar Index falling toward the 100.70 area. Lower US yields usually support higher-beta currencies such as the Australian Dollar, helping AUD/USD recover despite weakness in Australia’s own data.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6930. The pair is supported by the 20-period Simple Moving Average (SMA) around 0.6895 and a series of nearby horizontal floors, hinting at a mildly constructive tone, yet it remains capped below the 100-period SMA at 0.6972. The horizontal resistance at 0.6944 forms the first topside barrier ahead of the medium-term average, while the Relative Strength Index (RSI) near 61 shows firm but not extreme bullish momentum that could encourage further probing of overhead supply if 0.6944 gives way.

On the downside, initial support is seen at 0.6916, followed by 0.6903 and the 20-period SMA at 0.6895, with a deeper cushion at 0.6883. On the topside, a break above 0.6944 would expose the 100-period SMA at 0.6972 as the next key resistance, and only a sustained move above this level would open the door for a more pronounced bullish extension in the near term.

(The technical analysis of this story was written with the help of an AI tool.)

• NZD/USD advances after a weaker-than-expected US employment report.
• US job creation slows sharply in June, reinforcing expectations of Fed policy hold.
• BNY notes that the RBNZ will maintain a six-member MPC ahead of its July 8 meeting.

NZD/USD rises 0.59% on Thursday to trade around 0.5705 at the time of writing, supported by a sharp decline in the US Dollar (USD) following the release of a significantly weaker-than-expected US employment report.

Data released by the Bureau of Labor Statistics (BLS) showed that Nonfarm Payrolls (NFP) increased by only 57K in June, well below the market consensus of 110K. May's reading was revised down to 129K from 172K previously, while April's figure was also revised lower to 148K from 179K, resulting in a combined downward revision of 74K jobs. Meanwhile, the Unemployment Rate unexpectedly declined to 4.2% from 4.3%, while the Labor Force Participation Rate fell to 61.5% from 61.8%. Annual wage growth, as measured by Average Hourly Earnings, accelerated slightly to 3.5%, in line with expectations.

Markets are nevertheless focusing on the weak headline payroll figure, reinforcing expectations that the Federal Reserve (Fed) could adopt a less hawkish monetary policy over the coming months. This outlook weighs on the US Dollar and supports rival currencies, including the New Zealand Dollar (NZD).

On the New Zealand side, domestic developments are also providing support to the currency. According to BNY, the Reserve Bank of New Zealand (RBNZ) will maintain a six-member Monetary Policy Committee (MPC) until the November election, following a split 3-3 vote at its May meeting. The bank also noted that May building consent data showed a monthly decline in new approvals but a 19% increase on an annual basis, highlighting that residential activity remains resilient ahead of the July 8 monetary policy decision.

• NFP misses forecasts, with prior months revised sharply lower.
• Fed tightening bets ease as yields pressure the US Dollar.
• Political uncertainty and rumors of intervention keep Cable volatility elevated.

The Pound Sterling (GBP) registers solid gains against the US Dollar (USD) on Thursday after the latest US employment report missed estimates, reducing the chances of a Federal Reserve (Fed) rate hike. At the time of writing, the GBP/USD pair trades at 1.3359, down 0.64%, its highest level over the last ten days.

GBP/USD gains as soft payrolls drag Dollar and yields lower

The US jobs market weakened slightly in June, with Nonfarm Payrolls coming at 57K below estimates of 110K. May's numbers were downwardly revised from 172K to 129K, and April’s data were revised from 179 K to 148 K. The Unemployment Rate ticked lower from 4.3% to 4.2%, but analysts blame it on a decline in labor force participation, which reached 61.5%, the lowest since March 2021.

Money markets adjusted their Fed hawkish bets, with investors expecting just 23 basis points of tightening towards the end of the year, according to Prime Terminal data.

US Treasury yields are aiming lower, with the 10-year T-note yields at 4.461%, down 2 basis points, a headwind for the Greenback. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is down 0.65% at 100.75.

US Factory Orders contracted in May, due to a decline in commercial aircraft orders, with the numbers dropping to -1.3%, below estimates of -1.8% but down from April’s stellar 5.3% print.

San Francisco Fed's Mary Daly commented that she sees positive signs about the US economy and recognised that higher prices were caused by tariffs and the Oil price shock. She added that the policy is “slightly restrictive,” yet noted that there are scenarios in which the Fed must fight inflation.

In the UK, the economic schedule was absent, but the focus is on Andy Burhnamw, the favorite to succeed the current Prime Minister Keir Starmer.

Traders remain cautious about Cable amid uncertainty over Burnham’s policies. Meanwhile, the GBP remains boosted by the fall in Oil prices and by rumors of Japanese authorities intervening in the foreign exchange markets, as the USD/JPY pair fell from around 162.50 to 160.95 at the time of writing.

GBP/USD Price Forecast: Technical outlook

On the daily chart, GBP/USD trades at 1.3362, holding a bearish near-term bias as spot remains capped beneath the cluster of simple moving averages (50, 100 and 200) around 1.3413 and below the descending resistance trend line projected from 1.3522. The pair has slipped away from prior highs while the Relative Strength Index (14) at 54 stays just above its neutral line, hinting at modest rather than aggressive upside momentum that so far fails to overcome the overhead structure.

On the topside, initial resistance is located at the triple simple moving average area near 1.3413, with the next barrier coming at the descending trend resistance around 1.3522. On the downside, the key technical floor is the rising support trend line originating near 1.3159, where a decisive break would reinforce the broader bearish tone and expose lower levels, while holding above it would keep the pair bounded in a corrective consolidation under the moving averages.

(The technical analysis of this story was written with the help of an AI tool.)

ING’s Carsten Brzeski analyses a new German government reform package focused on cutting red tape, increasing labour market flexibility, and capping healthcare and pension costs to restore competitiveness. He notes that while the measures will not turn Germany’s stagnating economy into a booming one overnight, they can create a framework for future growth and support a more optimistic German GDP outlook.

Reforms aim to boost competitiveness

"Germany's World Cup campaign may have come to an abrupt end, but the country's reform drive is gathering momentum. In a bid to reverse the rather uncomfortable narrative, the government has just unveiled a sweeping reform package aimed at boosting competitiveness and demonstrating a renewed willingness to act. It may have taken longer than many hoped, but Germany's long-awaited summer of reforms has finally arrived."

"Most of today’s announced measures have not come out of the blue. The bureaucracy detox and simplifications were already presented in two important reports at the end of last year. What is new is the tax relief for lower and middle-income households."

"What is still missing is a clear longer-term strategy for affordable energy for both households and companies, as well as some tax relief for companies. Still, today’s reform package is finally a clear sign that Germany is at last moving. A departure away from moaning and analysing, towards tangible action."

"Admittedly, the package will still have to pass parliament, and it is not a package that will morph a stagnating economy into a booming economy overnight. But it is a package that could create the preconditions, the framework, for future growth. The healthcare and pension reform will put public finances on a sustainable footing in light of demographic change, and the other structural measures could loosen the brakes for future growth."

"Add to that the ongoing fiscal stimulus for infrastructure and defence, and the narrative for German growth turns more optimistic. It seems as if Germany has finally understood that economic success does not simply or effortlessly return. This is an enormous change and shows that, for once, the German government is definitely one step ahead of the national football team."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Silver jumps over 3% as disappointing US NFP data pressures the Greenback.
• September Fed rate hike odds fall following softer-than-expected NFP data.
• Technically, XAG/USD faces immediate resistance at $61.50, with the broader trend remaining tilted to the downside.

Silver (XAG/USD) climbs to the top of its weekly trading range on Thursday as the US Dollar (USD) slides to a two-week low after US Nonfarm Payrolls (NFP) data surprised to the downside. At the time of writing, XAG/USD trades around $61.15, up nearly 3.50% on the day.

Data released by the US Bureau of Labor Statistics (BLS) showed the US economy added just 57K jobs in June, well below market expectations of 110K. Meanwhile, May's payrolls were revised down to 129K from the previously reported 172K.

Traders quickly scaled back expectations for a Federal Reserve (Fed) rate hike at its September policy meeting, with the probability of a rate increase falling to 51% from 63% before the data release, according to the CME FedWatch Tool.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 100.74, retreating from an intraday high of 101.43.

However, the US Dollar's downside may remain limited as the weak employment report did little to change the Fed's hawkish stance. With inflation still running well above the central bank's 2% target, markets continue to expect the Fed could raise interest rates later this year, which could limit a stronger recovery in XAG/USD.

Technical Analysis:

On the daily chart, XAG/USD retains a bearish near-term bias as it holds below the 200-day Simple Moving Average (SMA) at $69 and the 100-day SMA at $75.

The Relative Strength Index (RSI) around 39 keeps momentum in mildly negative territory. The Moving Average Convergence Divergence (MACD) indicator remains slightly below zero with a shallow negative reading, hinting at weak downside pressure rather than a decisive bearish acceleration.

On the topside, immediate resistance is located at $61.50, with the 200-day SMA at $69.88 and the 100-day SMA at $75.08 reinforcing a broader ceiling for any recovery attempts.

On the downside, initial support emerges at the horizontal level of $55.50, where a decisive break could trigger further losses.

(The technical analysis of this story was written with the help of an AI tool.)