Market Sector Scanner: USD Falls Following Weak U.S. Employment Data
Markets reacted to weaker U.S. employment data last week, with only 57,000 jobs added in June. The data pressured the U.S. dollar, supported gold and equities, and reduced expectations of another Fed rate hike. USD/JPY briefly rose close to 163 before intervention rumors and weak U.S. data triggered a sharp pullback. This week, traders will watch FOMC meeting minutes, Japan and EU economic data, yen intervention risk, and whether gold and major currency pairs can hold recent technical levels.
Last week's main event was the weaker U.S. jobs report, with only 57,000 jobs added in June. The data pressured the dollar, supported gold, and reduced expectations of another Fed rate hike, helping equities move higher. USD/JPY also drew attention after rising above 162, before intervention warnings and market rumors triggered a sharp pullback. In Japan, the Tankan survey showed large manufacturer sentiment at its strongest level since 2018, while WTI crude stayed quiet and continued to drift lower.
Key Events Calendar
Market Outlook
Forex Market
USD/JPY
Last Week Recap
USD/JPY rose close to 163 last week, but ended the week lower as several factors pressured the pair. Rumors of Japanese intervention, signs that Japan may intervene without warning, and weaker-than-expected U.S. employment data all encouraged traders to reduce long positions.
Technical Picture
The upper Bollinger Band acted as resistance and the market turned lower in the middle of the week. The close below the 10-day moving average also suggests that the recent uptrend may be starting to weaken.
Outlook This Week
The break below the 10-day moving average could lead to more selling from traders who bought USD/JPY over the past few months. This week, the pair may trade sideways to lower, which could create good range-trading opportunities.
GBP/JPY
Last Week Recap
GBP/JPY moved toward the top of its recent range last week as concerns over the U.K. political situation eased and the pound gained after weaker-than-expected U.S. employment data.
Technical Picture
The upper Bollinger Band acted as resistance and triggered a selling signal. However, the 10-day moving average has started to turn higher, showing that the pair remains range-bound rather than clearly bearish.
Outlook This Week
Overall, GBP/JPY remains in a range, so traders may look for selling opportunities near resistance this week.
EUR/USD
Last Week Recap
EUR/USD finally broke its recent downtrend last week after weaker-than-expected U.S. employment data surprised the market and encouraged buying.
Technical Picture
The pair moved back above the 10-day moving average, but the moving average is still pointing lower. This suggests that the recent downtrend may not be fully over yet.
Outlook This Week
Although EUR/USD rose last week, one weak U.S. data release may not be enough to end the medium-term downtrend. This week, the pair may trade sideways as markets wait for the next important U.S. data release.
Equities
U.S. Stock Market
Last Week Recap
The Nasdaq recovered some of its recent losses last week, but selling pressure remained as investors stayed cautious about high valuations in AI-related stocks.
Technical Picture
The market is trading near the middle of the Bollinger Band and continues to move above and below the 10-day moving average. This suggests the Nasdaq is currently trading in a range rather than showing a clear trend.
Outlook This Week
SpaceX joining the Nasdaq index could increase volatility as funds adjust their portfolios and add the stock. Overall, this week may continue to provide good range-trading opportunities in the Nasdaq.
Commodities
Gold
Last Week Recap
Gold tested lower at the start of last week, but weaker-than-expected U.S. employment data triggered strong buying. Traders welcomed the possibility that U.S. interest rate hikes may be delayed, which helped gold rebound from recent lows.
Technical Picture
A double bottom pattern formed last week, and the market closed back above the 10-day moving average. This suggests that the recent downtrend may have ended in the short to medium term.
Outlook This Week
With the recent downtrend likely over, buying on weakness may be the preferred strategy for both short-term and medium-term traders, as long as gold remains above the 10-day moving average.
Take advantage of zero commissions on oil and indices – start today!
Markets will continue to process the weaker U.S. employment data as U.S. traders return after Friday's holiday. With few major U.S. data releases this week, economic data from Japan and the EU could become more important for market direction. Traders will also watch the latest Fed meeting minutes for clues on the future path of U.S. interest rate policy.
