USD/JPY Tests Multi-Year Highs, While USD/CAD Holds Near Yearly Peaks

After a strong rally in the US dollar at the end of last week, the currency has moved into a consolidation phase against major counterparts. Investors remain cautious ahead of the release of the ADP employment report for the US private sector, which is expected to serve as a key indicator before Friday’s official Nonfarm Payrolls data. Additional influence on the dollar’s dynamics today may come from the manufacturing PMI and ISM indices, as well as a speech by Federal Reserve Board member Christopher Waller.

Market participants continue to assess the outlook for future Federal Reserve policy. Despite no new rate decisions, Fed officials maintain a hawkish tone, stressing the need to keep interest rates elevated until there are clear and sustained signs of inflation slowing. As a result, demand for the dollar remains strong; however, ahead of key data releases, investors are partially taking profits on long USD positions, contributing to a consolidation phase in the market.

USD/JPY

Unlike most dollar pairs, USD/JPY is not showing clear consolidation and continues its upward trend. After reaching a new two-year high, the price has strengthened to 162.60, with no technical signals yet indicating the start of a correction.

Technical analysis of USD/JPY suggests potential further gains towards 163.00–164.00. A corrective pullback could begin only after a decisive break below 161.60.

Key events for USD/JPY:

• Today at 15:15 (GMT+3): ADP US Nonfarm Employment Change;
• Today at 16:00 (GMT+3): Fed Governor Waller speaks;
• Today at 17:00 (GMT+3): ISM Manufacturing PMI (US).

USD/CAD

USD/CAD buyers failed to break resistance at 1.4250. After an unsuccessful attempt to hold above this level, buying pressure eased and the pair moved back below 1.4200. The nearest key support is located at 1.4160. If the pair settles below this level in upcoming sessions, a deeper corrective decline may begin. At the same time, a firm break above 1.4250 could trigger a renewed upward move.

Key events for USD/CAD:

• Today at 16:00 (GMT+3): Bank of Canada Governor Macklem speaks;
• Today at 17:30 (GMT+3): US crude oil inventories;
• Today at 18:30 (GMT+3): Atlanta Fed GDPNow indicator.

Overall, ahead of the ADP report, the dollar is likely to maintain mixed price action near recent highs. If labour market data confirms resilience in the US economy, expectations of prolonged Fed tightening may strengthen, supporting further USD gains. Conversely, weaker data could trigger profit-taking and lead to a corrective move ahead of Friday’s official Nonfarm Payrolls release.

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