**Forex Market Forecast: EUR/USD, USD/JPY, and AUD/USD React Sharply Following U.S. NFP Miss**
*Adapted and expanded from the original article by Christopher Lewis on FXEmpire.com*
The U.S. Dollar experienced significant downward pressure following the disappointing U.S. Non-Farm Payrolls (NFP) report released on Friday, which missed market expectations. The weaker-than-expected employment data has reshaped market sentiment around interest rate expectations, prompting a shift in forex dynamics. Here’s a comprehensive look at the market reactions and forecasts for three major currency pairs: EUR/USD, USD/JPY, and AUD/USD.
## Key Highlights:
– The U.S. NFP report showed signs of a cooling labor market.
– Interest rate expectations shifted following the release.
– The U.S. Dollar weakened significantly against major currencies.
– EUR/USD rallied toward a key resistance level.
– USD/JPY dropped sharply amid a stronger Yen and falling yields.
– AUD/USD rebounded as the Greenback weakened.
Let’s explore how each of these currency pairs is responding to the evolving market dynamics.
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## U.S. NFP Report Overview
The catalyst for this major forex movement was Friday’s NFP report, which came in significantly below expectations. Market participants had anticipated robust job growth, but the actual figure fell short, altering expectations around the Federal Reserve’s rate policy moving forward.
Key data from the NFP report includes:
– **Job gains**: The U.S. economy added fewer jobs than expected, signaling a slight contraction in labor market momentum.
– **Unemployment rate**: Held relatively steady but with underlying signs of a slowly rising trend.
– **Wage growth**: Remained moderate, suggesting limited inflationary pressure from wages.
These data points collectively contributed to a market recalibration, leading to a sell-off in the U.S. Dollar as traders began to price in a higher probability of interest rate cuts from the Federal Reserve in the near to medium term.
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## EUR/USD Analysis: Bullish Momentum Regains Control
The Euro made notable gains against the U.S. Dollar as traders adjusted to the implications of a dovish Fed. The EUR/USD pair surged higher on Friday, breaking through technical resistance levels and closing near recent highs.
### Technical Insights:
– **Resistance zone**: The pair approached the 1.09 level, a significant resistance area where selling pressure has stalled advances in the recent past.
– **Moving Averages**: Price climbed above both the 50-day and 200-day Simple Moving Averages (SMA). This is often interpreted as a bullish indicator, suggesting strong upward momentum.
– **Trend structure**: Short-term price action reflects a clear bullish trajectory, supported by increasing volume and consistent higher lows.
### What to Watch For:
– A sustained break above 1.09 could open the door to a test of the 1.10 psychological level.
– Strong resistance remains at the 1.1040 to 1.1070 zone, where previous rallies have lost momentum.
– Traders will be monitoring upcoming European economic data and ECB commentary to assess whether the euro can maintain its recent strength.
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## USD/JPY Analysis: Yen Strengthens Amid Falling U.S. Yields
One of the most dramatic reactions to Friday’s data came from the USD/JPY pair, which plummeted as the Japanese Yen surged and Treasury yields declined.
### Contributing Factors to USD/JPY Decline:
– **U.S. Treasury yields**: Fell sharply after the NFP data, reducing the appeal of the U.S. Dollar versus lower-yielding currencies like the Yen.
– **Rate differentials**: Narrowed, making the USD less attractive on a relative basis.
– **Risk sentiment**: Shifted away from the Dollar as traders started pricing in earlier Fed rate cuts.
### Technical Overview:
– **Support levels**: The pair broke below the 155.00 support level, a
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