GBP/JPY Slumps After Dismal UK Employment Figures Spark Dovish BoE Bets

Economic

Summary:

GBP/JPY fell to 195.10 after weak UK jobs data, with unemployment rising to 4.6% and jobless claims surging 33,100 in May, fueling BoE rate cut bets.

SELL GBPJPY

Close Time

CLOSED

195.400

Entry Price

193.000

196.600

207.482 -0.841 -0.40%

25.3

Pips

Profit

193.000

195.147

Exit Price

195.400

Entry Price

196.600

The British Pound took a hit against the Japanese Yen on Tuesday, with GBP/JPY tumbling after a disappointing UK employment report fueled speculation that the Bank of England (BoE) may be forced to cut interest rates sooner than anticipated. The pair, which had flirted with the 196.00 psychological level before the data release, erased recent gains and was trading near 195.10 by mid-afternoon, aligning with the 78.6% Fibonacci retracement of its January-to-April decline. The weakening UK labor market, coupled with a strengthening Yen amid cautious optimism from the Bank of Japan (BoJ), has tilted the scales in favor of sellers, raising questions about the Pound’s resilience in an increasingly uncertain economic climate.

The Office for National Statistics (ONS) released its latest labor market report, painting a picture of a UK economy grappling with softening conditions. The International Labour Organization (ILO) unemployment rate ticked up to 4.6% in the three months to April 2025, up from 4.5% in the prior quarter, marking the highest level since summer 2021. While the figure met economists’ expectations, it underscored a gradual loss of momentum in the labor market, a critical driver of economic activity.

More concerning was the Claimant Count Change, which revealed a sharp rise in jobless benefit claims. In May, claims surged by 33,100, reversing April’s revised decline of 21,200 and overshooting forecasts for a modest increase of 9,500. This spike suggests that businesses, battered by rising costs, are scaling back hiring or shedding jobs altogether. The employment change data further darkened the outlook, with only 89,000 jobs added in the three months to April, down from 112,000 in March, signaling a slowdown in job growth as economic activity cools.

Adding to the gloom, payroll data showed a steep drop of 109,000 employees in May, the largest monthly decline since May 2020, bringing the total to 30.2 million. The ONS also reported a 63,000 fall in job vacancies to 736,000 in the March-to-May period, marking the 35th consecutive quarterly decline. These figures reflect a labor market under strain, with firms hesitant to hire amid rising employer costs, including a recent hike in National Insurance contributions to 15% on salaries above £5,000 (up from 13.8% on salaries above £9,100) and a 6.7% increase in the minimum wage for workers over 21.

Liz McKeown, ONS director of economic statistics, noted, “There continues to be weakening in the labour market, with the number of people on payroll falling notably. Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing those who leave.” This cautious approach, driven by higher payroll taxes and global economic uncertainty, is stifling job creation and weighing on consumer confidence.

The softening labor market has intensified scrutiny on the BoE’s monetary policy stance. With wage growth easing to 5.2% (down from 5.6%) in the three months to April, inflationary pressures from salaries are moderating, potentially giving the BoE room to lower rates. UK inflation, revised to 3.4% in April after an ONS data correction, remains above the BoE’s 2% target, but the cooling jobs market could tip the balance toward dovish policy.

Market sentiment shifted decisively after the jobs report, with the OIS curve repricing in a dovish direction. Traders now see a 73% chance of a 25-basis-point rate cut in August, up from 66% before the data, and expect 46 basis points of easing by year-end, compared to 41 basis points previously. “The employment drop was much deeper than forecasts, and markets are reacting with GBP softness as traders price in a possible BoE pivot,” said one X post, capturing the mood.

Richard Carter, head of fixed interest research at Quilter Cheviot, warned, “With increased National Insurance contributions now bedded in, the employment picture is deteriorating as companies scale back hiring, and in some cases cut their UK workforce significantly. This complicates the BoE’s task, as slowing wage growth is offset by rising inflation risks.” The BoE’s next meeting, scheduled for next week, is unlikely to yield a rate cut, but analysts like Danni Hewson of AJ Bell suggest a summer cut is increasingly likely if labor market weakness persists.

On the other side of the GBP/JPY pair, the Japanese Yen is finding support as the BoJ signals a potential shift toward tighter policy. BoJ Governor Kazuo Ueda reiterated on Tuesday that the central bank would consider raising interest rates if inflation approaches or stabilizes around the 2% target. “We will raise rates if we have enough confidence that underlying inflation nears 2%,” Ueda said, tempering expectations but keeping the door open for a hike.

Japan’s Producer Price Index (PPI) for May, due Wednesday, is forecast to rise 0.3% month-on-month, up from 0.2%, which could further bolster the Yen if it signals rising cost pressures. With Japan’s economy contracting in Q1 2025 and the BoJ maintaining ultra-low rates, the narrowing interest rate differential with the UK is putting downward pressure on GBP/JPY.

Technical Analysis

From a technical perspective, GBP/JPY is flashing warning signs for bulls. The pair has respected a key resistance zone near 196.00, formed by a bearish engulfing pattern on the daily chart on May 14. On the 4-hour timeframe, a fresh bearish engulfing candle has emerged at this resistance, suggesting sellers are seizing control.Price is now at the highest point of this resistance, and the strong bearish engulfing indicates sellers are taking charge.

The 78.6% Fibonacci retracement level at 195.29 is providing temporary support, but a break below could see the pair target the 194.00 region or the 61.8% Fibonacci level near 193.50. Conversely, a reclaim of 196.00 would signal renewed bullish momentum, though the fundamental backdrop makes this less likely in the near term.

TRADE RECOMMENDATION

SELL GBPJPY

ENTRY PRICE: 195.40

STOP LOSS: 196.60

TAKE PROFIT: 193.00

Risk Warnings and Disclaimers

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Eva Chen

Commodity

Economic

Summary:

Gold prices attracted some buying on the dips on Tuesday, but the upward momentum still lacked bullish conviction. The U.S. dollar maintained modest intraday gains and capped gold's advance, driven by trade optimism. Expectations of a Federal Reserve rate cut, U.S. fiscal concerns, and geopolitical risks provided support for gold.

BUY XAUUSD

Close Time

CLOSED

3330.14

Entry Price

3365.00

3309.00

4326.91 +27.52 +0.64%

87.1

Pips

Profit

3309.00

3338.85

Exit Price

3330.14

Entry Price

3365.00

Fundamentals

Gold prices rebounded from a double-bottom pattern near US$3,301 on Tuesday, leveraging overnight lows, but have yet to breach the overnight high of US$3,338. Investors appear hesitant, opting to await further details from the ongoing China-U.S. trade negotiations before establishing new directional bets.

Furthermore, the latest May survey results from the Federal Reserve Bank of New York, released on Monday, indicated a broad decline in U.S. consumer inflation expectations for the future, marking the first such decrease in 2024. The one-year inflation expectation saw the most significant drop, falling from 3.6% in April to 3.2%, while the three-year expectation decreased from 3.2% to 3%. The five-year inflation expectation declined from 2.7% to 2.6%. Although inflation expectations remain above the Federal Reserve's 2% target, they have noticeably receded. Market expectations now anticipate a corresponding decline in the U.S. May CPI, which is scheduled for release this Wednesday, thereby fueling expectations of interest rate cuts. Consequently, U.S. Treasury yields generally fell by over 3 basis points, slightly offsetting the gains from the non-farm payrolls report. The U.S. Dollar Index (USDX) experienced broad, volatile weakness, providing support for gold prices.

Geopolitically, according to a report by China's Xinhua News Agency, Iran's Supreme National Security Council issued a statement on the 9th, stating that if Iran is attacked by Israel, Israel's secret nuclear facilities will become targets for Iranian strikes. Concurrently, U.S. media reports suggest that intelligence indicates Israel is preparing to attack Iranian nuclear facilities. This suggests that geopolitical conflicts in the Middle East are imminent, and market risk aversion remains high. Therefore, gold prices may maintain a range-bound, slightly bullish trend in the short term.

Market Remains Fragile, while a Sustained Breach above US$3,365 Is the Minimum Requirement for a Bullish Reversal_1

Technical Analysis

Gold prices advanced from their overnight lows on Tuesday, yet they have not breached the overnight high of US$3,338. A rebound following a significant decline is a logical response, but the sustainability of the recovery remains uncertain due to mixed signals from technical and geopolitical factors.

Daily analysis indicates that the positive momentum within the range is strengthening, which will continue to support this movement as long as prices remain above the US$3,321 level. Once the overnight high of US$3,338 is surpassed, bulls will inevitably test the lower levels of the two sell-offs from last week at US$3,365. A sustained break above this level would be considered the minimum requirement to maintain a positive bias for further gains and test the most significant sell-off level at US$3,383.

Indeed, the downward trend will remain very fragile for the time being, and it will still be challenging for the bulls to break through the upper resistance of the US$3,365 range. Investors should exercise caution when pursuing higher prices above this level.

Trading Recommendations

Trading Direction: Buy

Entry Price: 3325

Target Price: 3365

Stop Loss: 3309

Valid Until: June 25, 2025 23:55:00

Support: 3321, 3310, 3302

Resistance: 3338, 3343, 3353

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Gold plunged 100 US dollars and then touched the key trendline support. The exhaustion of the China-US risk premium and the development of the Middle-East geopolitical crisis triggered a technical counter-attack.

BUY XAUUSD

EXP

EXPIRED

3285.00

Entry Price

3490.00

3238.00

4326.91 +27.52 +0.64%

Pips

EXPIRED

3238.00

3426.07

Exit Price

3285.00

Entry Price

3490.00

Fundamentals

The current gold market is at a key node of the long-short game. The resonance of fundamental and technical factors provides structural support for the price rebound.

Recently, the London negotiations between China and the US and the phone call between Trump and Xi Jinping last week significantly reduced the safe-haven demand for gold. The gold price evaporated more than 100 US dollars in two consecutive trading days. The short-term bearish factors in the market are nearly fully considered, and the market focus has shifted to the details of the agreement implementation. However, the "reciprocal concessions" of China's relaxation of rare-earth exports and the US's relaxation of technical controls did not meet expectations, and the safe-haven selling pressure for gold eased.

At the same time, the situation in the Middle East escalated again due to the threat of Iran's nuclear facilities. Coupled with the normalization of drone attacks in the Russia-Ukraine conflict, the return of safe-haven funds provides immediate support for gold.

In addition, from the perspective of structural demand, the continuity of the global central banks' gold-buying boom constitutes a long-term supporting force. The People's Bank of China has increased its gold holdings for 7 consecutive months. Although the growth rate is the lowest in 14 months, under the trend of de-dollarization in emerging markets, the strategic position of gold in foreign exchange reserves continues to rise.

Currently, investors' attention is focused on the US May CPI data to be released this Wednesday, in order to assess the health of the US economy and predict the interest rate cut path of the Federal Reserve. Bart Melek, the head of the commodity strategy at TD Securities, believes that "in the case of a weak economic trend, there is a possibility of interest rate cuts, and the decline in risk-appetite momentum will prompt people to turn to gold."

Technical Analysis

Gold Bottoms out at 3,293 and Rebounds, Aiming for Another Rise to 3,403 _1

In the daily chart, following a break-through of 3,400 last Thursday, gold was suppressed and had declined for 3 days. This happened after the phone call between the leaders of China and the US, which reduced the safe-haven demand. Gold once reached a minimum of 3,293. Just after touching the previous upward trend line, gold quickly rebounded to around 3,330, indicating that the overall upward trend is intact. At the same time, the long-term moving averages MA60 and MA144 are still in a bullish arrangement, further supporting the overall bullish trend.

Looking above, gold is facing the pressure of yesterday's high of 3,338.12 in the short term. If it breaks through this position and moves upward, it will touch the pressure level of 3,350. If it can effectively break through this pressure level, the upward space of gold will be opened, and the first target is to test the high of 3,403.46 on June 5th.

For the space below, if gold is suppressed and weakens below the pressure levels of 3,338.12 or 3,350, it may continue to decline. If gold falls and breaks through 3,293, it may test the low of 3,245.33 on May 29th in the future.

Trading Recommendations

Trading direction: Buy

Entry price: 3285.00

Target price: 3490.00

Stop loss: 3238.00

Valid Until: June 24, 2025, 23:00:00

Support: 3293.31/3245.33

Resistance: 3338.12/3350.00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

This price area appears to act as a significant resistance zone, and repeated failures to break above it may indicate the formation of downside pressure.

SELL EURUSD

Close Time

CLOSED

1.14700

Entry Price

1.12070

1.15800

1.17340 -0.00054 -0.05%

110.0

Pips

Loss

1.12070

1.15807

Exit Price

1.14700

Entry Price

1.15800

Recent progress in U.S.-China relations has introduced a more constructive tone to global geopolitics, as senior officials—namely U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng—convened in London for two days of intensive negotiations. The discussions primarily focused on trade policy and export controls, with special attention given to the regulation of rare earth minerals. These talks could carry far-reaching implications for international trade flows and global supply chains, especially in the context of strategic technological competition.

On the macroeconomic front, the New York Fed's latest Survey of Consumer Expectations (SCE) revealed a decline in inflation expectations across the one-, three-, and five-year horizons. While this cooling in inflation outlook is generally seen as favorable, the survey also reflected a deterioration in household sentiment. Both current financial conditions and future outlooks were viewed more pessimistically by respondents, pointing to a potential softening in consumer confidence.

Adding to the mixed economic signals, the ISM Services PMI for May dipped to 49.9 from 51.6 in April, sliding below the key 50 threshold that delineates growth from contraction. Falling short of consensus forecasts of 52, the report suggests a mild contraction in the service sector—an area that constitutes a significant portion of U.S. economic output.

A closer look at the subcomponents showed a noticeable increase in the Prices Paid Index, which climbed to 68.7 from the prior 65.1, underscoring the persistence of inflationary pressures on input costs. Meanwhile, the Employment Index edged higher to 50.7 from 49, hinting at underlying resilience in the labor market within the services industry.

Against this backdrop, Chicago Fed President Austan Goolsbee emphasized a cautious outlook, citing rising downside risks associated with former President Donald Trump’s more aggressive tariff proposals. These emerging trade dynamics, he noted, are now being factored into the Federal Reserve’s broader risk assessment, given their potential to disrupt economic momentum.

Echoing this view, Fed Governor Lisa D. Cook also voiced concern over geopolitical and trade uncertainties, warning that despite the current macroeconomic stability, the resurgence of protectionist policies could pose long-term threats to growth.

In Europe, comments from ECB policymakers have taken a more hawkish turn. Notably, ECB's Peter Kazimir suggested that the central bank may be at—or very near—the end of its easing cycle. Supporting this view, ECB board member Isabel Schnabel added that the ECB might not diverge significantly from the Federal Reserve in its policy trajectory. These remarks provided a tailwind for the euro.

The upcoming calendar includes the ECB’s Monetary Policy Survey, several speeches from ECB officials, and the release of the Sentix Investor Confidence Index—all of which could further influence market sentiment toward the shared currency.

On the inflation front, Eurozone data showed faster-than-expected disinflation, which may provide the ECB with greater flexibility moving forward. The May CPI report indicated no monthly increase in headline inflation, while the annual figure slipped below the 2% threshold for the first time in eight months—falling from April’s 2.2%.

Core inflation also remained flat on a monthly basis, with the annual reading dropping to 2.3%, down from 2.7% in April and beating expectations for a 2.5% decline. These figures will likely be welcomed by ECB officials ahead of this Thursday’s monetary policy meeting, where a widely anticipated 25-basis-point rate cut could mark the eighth consecutive reduction in borrowing costs. A Bearish Correction May Unfold If Resistance Holds Firm_1

A Bearish Correction May Unfold If Resistance Holds Firm_1

Technical Analysis

EUR/USD has shown bearish reactions twice upon approaching the 1.1473 level on the 12-hour chart. This price area appears to act as a significant resistance zone, and repeated failures to break above it may indicate the formation of downside pressure. With the RSI recently peaking at 63 and lacking follow-through momentum, the risk of a pullback from this region seems to be increasing.

Looking at the broader structure, the 100-period and 200-period moving averages are located at 1.12788 and 1.09329, respectively—suggesting ample room for a corrective move lower. Should bearish momentum intensify, the 1.1207 zone emerges as the next logical support level and could serve as an initial target for sellers in the near term.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1470

Target price: 1.1207

Stop loss: 1.1580

Validity: Jun 20, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Forex

Economic

Summary:

If the pair once again fails to break convincingly below this level, it could set the stage for a bullish reversal from this zone.

BUY USDCAD

Close Time

CLOSED

1.37001

Entry Price

1.40210

1.35000

1.37689 -0.00011 -0.01%

1.0

Pips

Profit

1.35000

1.37011

Exit Price

1.37001

Entry Price

1.40210

Recent developments in U.S.-China relations have introduced a more constructive tone to the geopolitical landscape, as high-level officials—including U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng—met in London for two days of focused dialogue. The talks centered on trade and export controls, with particular attention on the strategic regulation of rare earth minerals. These discussions could have broader implications for global supply chains and trade dynamics going forward.

Meanwhile, the latest release of the New York Fed’s Survey of Consumer Expectations (SCE) showed a decline in inflation expectations across the one-, three-, and five-year horizons—generally a positive signal. However, the report also highlighted a concerning shift in household sentiment, with perceptions of both current and future financial conditions weakening, suggesting lingering consumer unease.

In other data, the ISM Services PMI for May fell to 49.9, dropping below the key 50-mark that separates expansion from contraction. This reading, down from 51.6 in April and below the consensus forecast of 52, reflects a slight contraction in the services sector—a critical component of the U.S. economy.

A deeper look into the report revealed a sharp increase in the Prices Paid Index, which jumped to 68.7 from 65.1, indicating persistent inflationary pressure. On the labor front, the Employment Index ticked up to 50.7 from 49, pointing to a degree of resilience in service-sector hiring.

Amid these mixed signals, Chicago Fed President Austan Goolsbee reiterated the central bank’s cautious approach, warning of increased downside risks tied to former President Donald Trump’s more aggressive stance on tariffs. These evolving trade policies, he emphasized, are now a part of the Fed’s broader risk assessment due to their potential impact on economic stability.

Fed Governor Lisa D. Cook also struck a cautious tone, emphasizing that while the broader U.S. economy remains relatively stable, the rising threat of trade frictions could undermine longer-term growth prospects.

Across the Atlantic, reports suggest that Prime Minister Carney is preparing to announce a significant increase in defense spending, aiming to meet NATO’s 2% of GDP target in the current fiscal year—up from the current 1.4%. Additional increases are expected in the years ahead. Behind the scenes, sources indicate that PM Carney is also quietly negotiating a potential trade and security agreement with President Trump, which could reshape bilateral economic ties if finalized.

On the commodities front, rising crude oil prices may offer support to the commodity-linked Canadian dollar (CAD). Given that Canada is the largest oil exporter to the U.S., higher crude prices often act as a tailwind for the CAD, potentially weighing on the USD/CAD pair in the process. Bulls May Be Preparing Their Move from This Key Zone_1

Bulls May Be Preparing Their Move from This Key Zone_1

Technical Analysis

USD/CAD recently revisited its local low at 1.3638—a level previously marked by a notable upward wick on September 19 of last year. The repeated touch of this price point may signal a strong buying interest in the area. If the pair once again fails to break convincingly below this level, it could set the stage for a bullish reversal from this zone.

The 100-period and 200-period moving averages currently reside at 1.4103 and 1.4025, respectively, offering medium-term upside targets if bullish momentum begins to build. The setup provides room for a recovery toward the 1.40–1.41 zone, which also overlaps with a region of previous resistance.

The Relative Strength Index (RSI) has once again dipped to around 32, approaching oversold territory. Historically, these levels often attract buyers, especially when the price is pressing downward. With no decisive bearish follow-through at this stage, the lack of downside conviction could pave the way for a potential rebound toward the 1.40 mark—near the 200-period moving average, which has previously acted as a strong technical barrier.

If bulls manage to defend the current support and gain traction, a constructive rally may unfold. Conversely, a clear break below the 1.3638 level could shift momentum back in favor of the bears, opening the door to further declines.

Trading Recommendations

Trading direction: Buy

Entry price: 1.3697

Target price: 1.4021

Stop loss: 1.3500

Validity: Jun 20, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Forex

Central Bank

Summary:

The Japanese yen strengthened against most major currencies, causing GBPJPY to retreat toward 195.65 on Monday. Revised data showed Japan’s economy held steady in Q1. Investors are now awaiting UK labor market data for fresh clues on the Bank of England's monetary policy outlook.

BUY GBPJPY

Close Time

CLOSED

194.799

Entry Price

199.810

192.500

207.482 -0.841 -0.40%

36.8

Pips

Profit

192.500

195.167

Exit Price

194.799

Entry Price

199.810

Fundamentals

During the European trading session on Monday, GBPJPY pulled back from an intraday high of 196.00 to around 195.65. The yen gained modestly after Japan’s revised Q1 GDP figures indicated economic stability, exerting light selling pressure on the pound-yen pair.

Initial estimates showed Japan's economy contracted by 0.2% quarter-on-quarter on an annualized basis — a smaller decline than the previous estimate of 0.7%.

According to Japan's Cabinet Office, the upward revision in Q1 GDP was driven primarily by stronger private consumption, which accounts for more than half of the nation’s economic activity. Household spending rose by 0.1%, compared to a flat reading in the preliminary report.

Meanwhile, Japanese Prime Minister Shigeru Ishiba warned that rate hikes by the Bank of Japan could place strain on the government’s spending plans, as higher borrowing costs may lead to increased financing expenses. Concerns in Tokyo over rising debt servicing costs could prompt traders to scale back bets on further rate hikes by the BOJ this year.

In the UK, investors are awaiting the employment report for the three months ending in April, due Tuesday. The labor market report is expected to show the ILO unemployment rate ticking up to 4.6% from the previous 4.5%. Average earnings, both including and excluding bonuses, are projected to grow by 5.5% year-on-year.

Investors will closely monitor this week’s UK labor market data, which could reshape expectations for the Bank of England’s policy trajectory. The BoE is widely expected to leave rates unchanged at 4.25% at its next policy meeting on June 19.

Bulls Poised to Regain Momentum Amid Highlight Shifting to Monetary Policy_1

Technical Analysis

GBPJPY maintains a neutral intraday stance for now. As long as the 191.86 support level holds, further gains remain in view. A break above 196.38 would resume the rally from 184.35 toward the key resistance zone at 199.79, with the next major upside target at 204.14 — representing the 100% Fibonacci extension of the 180.00–199.79 move.

Trade Recommendations

Trade Direction: Long

Entry Price: 194.80

Target Price: 199.81

Stop Loss: 192.50

Valid Until: June 24, 2025 23:55:00

Support: 194.22/193.75/193.21

Resistance Levels: 196.31/196.48/197.17

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

USD/CAD retreats as markets digest robust U.S. payrolls and refocus on US-China trade negotiations, while Canadian jobless data triggers loonie softness.

SELL USDCAD

Close Time

CLOSED

1.36700

Entry Price

1.36000

1.37100

1.37689 -0.00011 -0.01%

42.3

Pips

Profit

1.36000

1.36277

Exit Price

1.36700

Entry Price

1.37100

The USD/CAD pair fell broadly on Monday, reversing some of Friday’s sharp post-payroll gains as investors reassessed the strength of the U.S. labour market and turned their attention to a renewed round of U.S.-China trade talks taking place in London. While the tone in global markets remains cautiously optimistic, traders appear to be rotating out of the U.S. Dollar following its recent rally, amid growing questions over the sustainability of economic strength and Federal Reserve policy direction.

After Friday’s blockbuster Nonfarm Payrolls (NFP) report propelled the greenback higher across the board, Monday's price action reflected a natural pause. Market participants are now looking for the next major catalyst, and the rekindled dialogue between the United States and China is taking center stage. Trade envoys from both nations are convening in London in a bid to revive the momentum established during last month’s Geneva summit, which resulted in a notable rollback of reciprocal tariffs and was hailed as a step toward de-escalation.

While headlines around trade have turned marginally positive, the broader mood remains cautious. The recent history of back-and-forth tariff policy and fragile trust has left traders wary. As such, any sign of friction could swiftly tilt sentiment, especially with the U.S. election cycle drawing closer and global supply chain vulnerabilities still top of mind.

The U.S. Dollar surged on Friday after the May NFP report showed a stronger-than-expected 139,000 jobs added, well above the 130,000 consensus forecast. While the data wasn’t explosive, it was sufficient to counteract the gloom from weaker ISM services and manufacturing figures earlier in the week, as well as a disappointing ADP report.

The Unemployment Rate held steady at 4.2%, while average hourly earnings remained firm with a 3.7% year-over-year increase. Together, the figures painted a picture of a labour market that, while slowing, remains resilient. Crucially, they aligned with the Federal Reserve’s messaging that no immediate rate cuts are on the horizon.

This data undermined rate cut bets, lifting short-term yields and boosting the dollar on Friday. But as the week begins, investors seem to be reassessing just how much runway the greenback has, especially in light of ongoing geopolitical and trade risks.

Across the border, Canada’s own labour market data painted a more complex picture. The economy added a net 8.8K jobs in May, following a 7.4K job loss in April, and handily beating expectations for a 15K drop. However, the surprise increase in employment was overshadowed by a disappointing uptick in the Unemployment Rate, which climbed to 7.0%—the highest since the height of the COVID-19 pandemic.

The rise in joblessness, despite the headline beat, reflects deeper structural challenges in the Canadian economy, including regional disparities in job creation and lingering weakness in sectors like manufacturing and energy. Unsurprisingly, the loonie gave back some gains after the data, with markets doubting whether this print was strong enough to change the Bank of Canada’s cautious stance.

Technical Analysis

Technically, USD/CAD remains capped below the 1.3690 resistance level—a critical ceiling the pair has failed to decisively break in recent sessions. The short-term trend remains bearish, underpinned by sustained pressure below the 50-day Exponential Moving Average (EMA), which continues to exert downward momentum.

Furthermore, the pair’s recent rejection near overbought levels on the Relative Strength Index (RSI) suggests waning bullish momentum. The presence of a minor descending trendline adds further downside pressure, with bears eyeing a potential test of support near 1.3600 if sentiment remains cautious and oil prices firm—often supportive of the Canadian Dollar.

TRADE RECOMMENDATION

SELL USDCAD

ENTRY PRICE: 1.3670

STOP LOSS: 1.3710

TAKE PROFIT: 1.3600

Risk Warnings and Disclaimers

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