U.S. Dollar Retreats Despite Strong Non Farm Payrolls Data: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Retreats As Traders Focus On Non Farm Payrolls Data

U.S. Dollar Index is losing ground as traders react to the Non Farm Payrolls report. The report indicated that U.S. economy added 115,000 jobs in April, compared to analyst forecast of 62,000.  Unemployment Rate remained unchanged at 4.3%, in line with analyst estimates.

Today, traders also focused on the Michigan Consumer Sentiment report. The report showed that Consumer Sentiment declined from 49.8 in April to 48.2 in May, compared to analyst consensus of 49.5.

Year-ahead inflation expectations declined from 4.7% in April to 4.5% in May. Long-run inflation expectations decreased from 3.5% to 3.4%.

U.S. Dollar Index failed to settle above the resistance at 98.00 – 98.15 and pulled back towards the 97.90 level. In case U.S. Dollar Index settles below 97.90, it will move towards the nearest support level, which is located in the 97.35 – 97.50 range.

EUR/USD Moves Higher As Germany’s Exports Exceed Expectations

EUR/USD gained ground despite the disappointing Industrial Production report from Germany. The report showed that Industrial Production decreased by -0.7% month-over-month in March, compared to analyst forecast of +0.5%.

Germany’s Exports increased by +0.5% month-over-month in March, while analysts expected that they would decline by -1.7%. The better-than-expected Exports report from Germany provided additional support to the European currency.

A successful test of the resistance at 1.1765 – 1.1780 will push EUR/USD towards the resistance level at 1.1850 – 1.1865. RSI remains in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

GBP/USD Gains Ground As Traders React To UK Elections Results

GBP/USD moved higher as traders reacted to the results of local elections in the UK. The results showed that Nigel Farage’s Reform UK party gained steam. Prime Minister Keir Starmer said that results were “tough” but added that he had no plans to step down as Labour leader.

The nearest resistance level for GBP/USD is located in the 1.3650 – 1.3665 range. A move above the 1.3665 level will provide GBP/USD with a chance to gain additional upside momentum.

USD/CAD Tests New Highs As Canada’s Unemployment Rate Jumps To 6.9%

USD/CAD gained ground as traders focused on the disappointing Unemployment Rate report from Canada. The report indicated that Canada’s Unemployment Rate increased from 6.7% in March to 6.9% in April, compared to analyst forecast of +6.7%. The weak labor market data put pressure on the Canadian dollar. Other commodity-related currencies gained ground in today’s trading session.

Currently, USD/CAD is trying to settle above the resistance level at 1.3700 – 1.3715. In case this attempt is successful, USD/CAD will head towards the next resistance level, which is located in the 1.3775 – 1.3790 range.

USD/JPY Pulls Back Amid Falling Treasury Yields

USD/JPY failed to settle above the 157.00 level and pulled back towards the 156.50 level as traders reacted to falling Treasury yields. The yield of 2-year Treasuries declined below the 3.90% level, while the yield of 10-year Treasuries settled below 4.37%.

Worries about potential interventions from the BoJ may have served as an additional bearish catalyst for USD/JPY.

If USD/JPY pulls back below the 156.50 level, it will head towards the support level, which is located in the 154.50 – 155.00 range. On the upside, a move above the 157.00 level will open the way to the test of the 50 MA at 157.57. If USD/JPY climbs above the 50 MA, it will move towards the key resistance level at 158.00 – 158.50.

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