Limited Bounce for the Dollar After a Stronger NFP

The dollar made gains in most of its pairs on 3 July while gold retreated somewhat after the American job report beat expectations in both major parts although average earnings grew less quickly. Follow up has been limited so far with the USA on holiday on Friday 4 July. This article summarises the latest NFP and its context then looks briefly at the charts of XAUUSD and EURUSD.

Total nonfarm for May came in at 147,000 on 3 July, significantly above the consensus of around 110,000 and in line with the average over the last 12 months of about 146,000:

Earlier this year, it had seemed that the job market in the USA might start to slow down amid DOGE’s cuts of federal funding and government jobs and later escalating trade wars. However, the rate of unemployment has now remained stable between 4% and 4.2% for more than a year and it seems that any possible downturn probably won’t be clearly visible immediately.

The figure for total nonfarm has beaten the consensus at least slightly for many consecutive months and for most of 2025 so far the previous month’s figure has been revised upward. A generally stronger job market than had been expected around the end of last year means that there’s less pressure on the Fed to cut rates and that the overall economy is likely to be more resilient.

The next major regular data from the USA will be inflation on 15 July. For now, there’s no significant intrigue around the Fed’s next meeting on 30 July: there’s a probability of around 95% that the Fed will hold again then at the current 4.25-4.5% according to CME FedWatch.

Stronger NFP Puts a Lid on Gold

Gold bounced quite strongly on 30 June from around $3,250 the week before that as traders monitored the debate around the American tax and spending bill and its likely effects on the deficit. However, 3 July’s stronger than expected NFP seems to have capped gains for the time being. Further implementations of tariffs has continued to be chaotic.

While there’s no definitive evidence yet that the main uptrend has ended, it certainly seems to have paused for now and been replaced by a short to medium-term sideways trend. 15 May brought a lower low intraday but $3,250 seems to be established as a fairly strong support since then, tested unsuccessfully twice at the end of May and June.

Resistance is less clear: $3,450 seems to be a likely area of reaction but this is approximate. ATR has declined fairly consistently since peaks in April and May but might now be bottoming out while volume is also relatively low now compared to the average early last quarter. The value area between the 20 and 50 SMAs is the main technical reference for now; whether the short-term direction is up or down seems to depend mainly on news, especially American politics.

Euro-dollar Retreats from $1.18

Euro-dollar’s uptrend which has lasted fairly consistently since the start of 2025 continued in June with the price reaching a fresh four-year high above $1.18 on 1 July. Less confidence in the USA as the government continues to flip-flop and contradict on tariffs has driven capital out of the dollar. Monetary policy in the eurozone might stabilise with majority expectations pointing to only one more cut by the ECB this year while CME FedWatch suggests an 80% probability of at least two cuts by the Fed before the end of 2025.

Low volume and clear overbought conditions might point to a pause in the uptrend soon, but selling demand also seems to be limited as seen from the relatively long tails of recent candlesticks. The 23.6% monthly Fibonacci retracement is slightly above the top of this chart around $1.1885. The 38.2% Fibo around $1.166 is a possible area of support.