The US Dollar experienced notable weakness against major currencies during the European trading session on Friday, following the release of weaker-than-expected US Nonfarm Payrolls (NFP) data for June. The NFP report showed that the US economy created 57,000 new jobs in June, significantly below the consensus estimate of 110,000 and the previous month's figure of 172,000 [1]. This disappointing jobs data led traders to reassess expectations for further hawkish interest rate moves by the Federal Reserve, resulting in selling pressure on the US Dollar. The US Dollar Index (DXY), which tracks the Greenback against six major currencies, traded 0.14% lower near 100.70 during the session [1].
In the USD/CAD market, the pair edged lower to around 1.4175, reflecting the broader US Dollar weakness. Despite this decline, technical analysis indicates that USD/CAD maintains a bullish bias, with prices remaining above both the 20-day EMA (1.4108) and the 50-day EMA (1.3965). The Relative Strength Index (RSI) hovered just below the overbought region near 70, suggesting persistent but stretched upside momentum. Analysts noted that a further correction toward the 20-day EMA could present a buying opportunity, while a break above the June 24 high at 1.4248 could see the pair advance toward 1.4300 [1]. On the Canadian Dollar side, the currency remained under pressure due to oil prices returning to pre-Middle East war levels, as Oman reported progress in indirect talks between the US and Iran [1].
Meanwhile, the USD/JPY pair also turned lower for the second consecutive day, dropping to a more than two-week low below the 23.6% Fibonacci retracement level at 161.00 before recovering slightly to just below that mark, down over 0.15% for the day [2]. Technical analysis suggests that the path of least resistance for USD/JPY remains to the downside, with support seen near the 200-period EMA at 160.57 and further at the 38.2% Fibonacci retracement near 159.86. The Relative Strength Index (RSI) around 33 indicates weak momentum, pointing to a consolidative rather than aggressively bearish setup [2].
A heat map of major currencies showed that the Japanese Yen was the strongest against the US Dollar this week, with the USD/JPY pair declining by 0.55% [2]. The Canadian Dollar also gained slightly against the US Dollar, with a 0.10% move [2].
Looking ahead, investors are focusing on the upcoming release of the US ISM Services PMI data for June, which could further influence market sentiment and US Dollar performance [1].
CONCLUSION
The weaker-than-expected US Nonfarm Payrolls data triggered a broad selloff in the US Dollar, impacting both the USD/CAD and USD/JPY pairs. Technical indicators suggest potential for further corrections, but the overall trend remains data-dependent. Market participants are now awaiting additional US economic data for further direction.