Dollar Gains Fresh Momentum: Market Assesses the Impact of the NFP Report

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The US dollar strengthened against its major counterparts after the release of a robust US labour market report. Non-farm payrolls increased by 172K in May, well above the forecast of 85K, confirming the resilience of the US economy and reducing expectations of an imminent easing of monetary policy by the Federal Reserve. Additional support for the greenback comes from rising geopolitical tensions in the Middle East, which continue to boost demand for safe-haven assets.

Investors remain focused on developments in the conflict between Israel and Iran. Over the weekend, both sides exchanged large-scale strikes, leading to a further escalation of tensions in the region. The increase in geopolitical risks is contributing to persistent uncertainty across global financial markets and strengthening demand for the US dollar as a safe-haven currency. Against this backdrop, market attention is gradually shifting towards upcoming US economic releases, which are expected to either confirm or challenge the sustainability of the current bullish momentum in the dollar.

USD/CAD

Previously identified reversal patterns in USD/CAD played out successfully, allowing buyers to test a key resistance level on the daily timeframe near 1.3960.

From a technical perspective, USD/CAD has approached a resistance zone formed at the end of March. Following the sharp rally, the market may enter a profit-taking phase, particularly if upcoming macroeconomic data fail to support further dollar strength. However, as long as the pair remains above nearby support levels, the upward momentum is likely to remain intact. A decisive break and close above 1.3960 could pave the way for further gains towards the 1.4000–1.4050 area.

Key events for USD/CAD:

  • Today at 15:15 (GMT+3): US ADP Employment Change;
  • Today at 15:30 (GMT+3): Canadian Trade Balance;
  • Today at 17:00 (GMT+3): US Existing Home Sales.

USD/CHF

USD/CHF also received support from the strong NFP report and continues to advance towards this year's March highs in the 0.8020–0.8040 region.

Technical analysis of USD/CHF points to the possibility of a test of the nearest resistance levels at 0.8020–0.8040. Should a corrective decline begin, the pair may retreat towards the 0.7910–0.7940 area.

Key events for USD/CHF:

  • Today at 18:30 (GMT+3): Atlanta Fed GDPNow estimate;
  • Today at 19:00 (GMT+3): EIA Short-Term Energy Outlook;
  • Tomorrow at 15:30 (GMT+3): US Consumer Price Index (CPI).

In summary, the strong employment report has reinforced the dollar's position and reduced expectations of near-term Federal Reserve policy easing. Geopolitical risks in the Middle East remain an additional supportive factor. At the same time, both USD/CAD and USD/CHF have already approached significant resistance levels, meaning that future price action will depend both on buyers' ability to establish a foothold above key thresholds and on the next round of US macroeconomic data.