U.S. Dollar Rebounds From Session Lows as NFP Data Keeps Fed Outlook in Focus

What to Know

• The U.S. Dollar Index rebounded from recent lows as traders continued to digest Non Farm Payrolls data.
• FedWatch pricing indicated a 45.9% probability that the Federal Reserve will raise the federal funds rate by 25 bps in September.
• The U.S. Dollar Index held above support at 100.50 – 100.65 and moved back above 100.80.
• A move above 101.00 could put the U.S. Dollar Index on course to test resistance at 101.15 – 101.30.
• EUR/USD advanced as traders considered the possibility that the Fed could be less hawkish than previously expected.
• GBP/USD continued trying to settle above resistance at 1.3335 – 1.3350.
• USD/CAD moved higher and attempted to settle above the 50 MA at 1.4206.
• USD/JPY attempted to regain the 161.50 – 162.00 zone as traders monitored intervention risks around the Japanese yen.

Dollar Recovers as Traders Reassess the Fed Path

The U.S. dollar moved away from session lows in holiday-thinned trading, with market participants still focused on the implications of the latest Non Farm Payrolls data. The recovery came after pressure on the dollar had increased as the jobs figures encouraged traders to question how hawkish the Federal Reserve can remain in the months ahead.

The central tension for currency markets remains the balance between softer labor-market signals and the possibility that inflation concerns may still keep policymakers cautious. FedWatch pricing indicated a 45.9% probability that the Federal Reserve will raise the federal funds rate by 25 bps in September. That expectation helped provide some support for the American currency, even as disappointing job market data made it harder for dollar bulls to rebuild momentum aggressively.

Thin holiday conditions also played a role in the market tone. Lower participation can amplify intraday swings, making technical levels more important for short-term traders. In that environment, the U.S. Dollar Index managed to avoid a breakdown below an important support area and recovered enough to put nearby resistance back in focus.

U.S. Dollar Index Holds Key Support

The U.S. Dollar Index failed to settle below support at 100.50 – 100.65 and rebounded above the 100.80 level. For technical traders, that response was important because it showed that buyers were still willing to defend the lower end of the recent range despite concerns about the labor market.

If the U.S. Dollar Index climbs above 101.00, it will move toward a test of resistance at 101.15 – 101.30. A break into that zone would not automatically confirm a sustained bullish reversal, but it would indicate that rate-hike expectations are still capable of generating demand for the dollar when bearish pressure fades.

On the downside, the 100.50 – 100.65 area remains the first important support zone. A successful test of that support would open the way to the next support at 99.75 – 99.90. Traders are likely to treat this lower zone as a more meaningful test of dollar sentiment because it would suggest that the post-data recovery had failed to attract follow-through buying.

EUR/USD Advances in Quiet Conditions

EUR/USD moved higher as traders bet that the Federal Reserve could be less hawkish than previously expected. The pair’s advance reflected the same macro theme that pressured the dollar earlier: weaker job-market signals may reduce the urgency for tighter policy, even if the market has not fully ruled out another rate increase.

From a technical perspective, EUR/USD remains focused on support at 1.1420 – 1.1435. If the pair stays above that zone, it may head toward resistance at 1.1500 – 1.1515. Chart watchers also noted that RSI is in moderate territory, which suggests there is room for the pair to gain momentum if supportive catalysts emerge.

On the support side, a move below 1.1420 would shift attention toward the 50 MA at 1.1394. If EUR/USD falls below the 50 MA, the next important downside target would be support at 1.1350 – 1.1365. That sequence places the pair in a clearly defined short-term range, with traders watching whether dollar weakness resumes or the greenback’s rebound expands.

GBP/USD Stays Near 1.3350 Resistance

GBP/USD remained stuck near 1.3350, continuing its attempts to settle above resistance at 1.3335 – 1.3350. The pair has been unable to deliver a decisive breakout so far, but the repeated test of this area shows that buyers have not abandoned the move.

RSI has recently moved back into moderate territory, giving the pair room to gain momentum in the near term if a fresh catalyst appears. In quiet markets, however, traders often want confirmation before chasing a breakout, particularly when price is sitting directly on a well-watched resistance band.

If GBP/USD settles above 1.3350, it will head toward the next resistance zone at 1.3450 – 1.3465. That would represent a meaningful extension of the current move and could strengthen the view that sterling is benefiting from a less supportive dollar backdrop.

On the downside, a move below 1.3335 would push GBP/USD toward 1.3300. If the pair declines below 1.3300, it will head toward support at 1.3250 – 1.3265. For short-term traders, that structure makes 1.3335 – 1.3350 the immediate battleground between continuation buyers and range-focused sellers.

USD/CAD Rises Despite Strength in Precious Metals

USD/CAD moved higher ahead of the weekend, even as precious metals markets rallied. Gold climbed above the $4150 level, while silver settled above $62.40. Other commodity-related currencies gained ground during the session, but the Canadian dollar did not prevent USD/CAD from advancing.

The move was notable because commodity-linked currencies often draw support when metals and broader resource markets are firm. However, currency pairs are driven by multiple forces at once, including interest-rate expectations, dollar demand, risk appetite and local macro factors. In this case, the U.S. dollar’s recovery from session lows helped keep USD/CAD supported despite the favorable tone in precious metals.

Technically, USD/CAD was trying to settle above the 50 MA at 1.4206. If that attempt succeeds, the pair will move toward resistance at 1.4225 – 1.4240. This resistance level has been tested multiple times and has proved its strength, making it an important hurdle for bulls.

A sustained move through that resistance would suggest that buyers have gained enough conviction to challenge the upper end of the recent range. Failure to break it, however, could keep USD/CAD locked in a consolidation pattern as traders wait for clearer signals from the dollar and commodity-sensitive currencies.

USD/JPY Rebounds as Intervention Risks Remain

USD/JPY attempted to rebound after a recent pullback that was driven by profit-taking. The pair remains highly sensitive to concerns about potential intervention, with traders cautious as the Japanese yen continues to trade near historically weak levels.

Market participants continue to debate whether the Bank of Japan has sufficient firepower to scare bulls away from the long-dollar trade. Previous attempts to provide support to the Japanese yen failed, and the Japanese currency tested multi-decade lows. That history has made some traders skeptical, although intervention risk can still trigger sudden volatility when positioning becomes crowded.

From a technical point of view, USD/JPY is trying to settle back above resistance at 161.50 – 162.00. If that attempt is successful, the pair will move toward recent highs at 162.80. A move above 162.80 would open the way to a test of 165.00.

The yen’s weakness remains tied to the broader policy divergence theme that has shaped the pair for an extended period. As long as traders believe U.S. rates can remain elevated while Japanese policy normalization stays limited, dips in USD/JPY may continue to attract buyers. Still, the higher the pair moves, the more closely traders will watch for official comments or signs of action aimed at supporting the yen.

Forex Markets Stay Data-Dependent

The latest price action across major currency pairs shows a market that is still heavily data-dependent. The dollar’s rebound indicates that traders are not ready to abandon the possibility of another Federal Reserve rate increase, but the reaction to the Non Farm Payrolls data also shows that labor-market weakness can quickly challenge bullish dollar positioning.

For EUR/USD and GBP/USD, the next moves depend on whether the dollar can extend its recovery or whether traders resume pricing a less hawkish Fed path. For USD/CAD, the interaction between broad dollar direction and commodity-linked sentiment remains central. For USD/JPY, technical momentum is important, but intervention risk remains an unusually large variable.

FXCOINZ will continue to track whether the U.S. Dollar Index can build on its move above 100.80 and challenge 101.00. A break above that level would keep resistance at 101.15 – 101.30 in focus, while a reversal toward 100.50 – 100.65 would signal that dollar bears are still active despite the rebound.

Frequently Asked Questions (FAQs)

Why did the U.S. dollar rebound from session lows?

The U.S. dollar rebounded as traders reassessed Non Farm Payrolls data and continued to price the possibility of another Federal Reserve rate increase. The U.S. Dollar Index also held an important support area at 100.50 – 100.65, encouraging short-term buyers.

What is the key level to watch on the U.S. Dollar Index?

The immediate upside level is 101.00. If the U.S. Dollar Index climbs above that level, it could test resistance at 101.15 – 101.30. On the downside, support remains at 100.50 – 100.65.

How are Fed rate expectations affecting the dollar?

FedWatch pricing indicated a 45.9% probability of a 25 bps Federal Reserve rate increase in September. That possibility has supported the dollar, although disappointing job market data has limited bullish conviction.

Why is EUR/USD moving higher?

EUR/USD is moving higher as traders bet that the Federal Reserve could be less hawkish than previously expected. The pair remains constructive while it holds above support at 1.1420 – 1.1435.

What resistance matters most for GBP/USD?

GBP/USD is focused on resistance at 1.3335 – 1.3350. If the pair settles above 1.3350, it may head toward the next resistance zone at 1.3450 – 1.3465.

Why is USD/CAD rising despite stronger precious metals?

USD/CAD is rising because broad U.S. dollar demand is offsetting support that commodity-related currencies might normally receive from stronger precious metals. The pair is also trying to settle above the 50 MA at 1.4206.

What are the key USD/CAD technical levels?

USD/CAD is attempting to settle above the 50 MA at 1.4206. If successful, it may test resistance at 1.4225 – 1.4240, a zone that has been tested multiple times and has proved strong.

Why are traders watching intervention risk in USD/JPY?

Traders are watching intervention risk because the Japanese yen has tested multi-decade lows, and authorities have previously attempted to support the currency. Even if those attempts failed, the risk of sudden action can affect positioning.

What happens if USD/JPY breaks above 162.80?

If USD/JPY moves above 162.80, it would open the way to a test of 165.00. Before that, traders are watching whether the pair can settle back above resistance at 161.50 – 162.00.

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