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Yen Strengthens on Hawkish BoJ and Weak US Dollar Ahead of Non-Farm Payrolls

During the American session, the USD/JPY pair dropped further, hitting a low of 141.65, its lowest level since August. This decline can be attributed to the hawkish comments from Bank of Japan (BoJ) official Ueda, signaling an exit from ultra-loose monetary policy in the coming months. Additionally, the weaker US Dollar has contributed to the sell-off, with the currency struggling to find demand.

USDJPY Daily Chart

USDJPY Daily Chart

Fed Rate Cut Speculation Weighs on the US Dollar

Speculation is growing that the Federal Reserve is finished with interest rate hikes and may start trimming rates as early as March. This sentiment, coupled with the cautious mood among investors ahead of key US employment figures, has further dampened the US Dollar’s strength. As a result, the Japanese Yen, considered a safe-haven currency, has experienced limited losses.

GBP/USD Rebounds, but Remains Below 1.2600

After reaching a two-week low below 1.2550 earlier in the day, the GBP/USD pair staged a rebound toward 1.2600. The US Dollar’s struggle to gain traction stems from signs of looser conditions in the US labor market ahead of the upcoming jobs report. Though technical indicators have yet to confirm a strong recovery, buyers may show interest if support forms around the 1.2600 level.

GBP/USD Daily Chart

GBP/USD Daily Chart

US Dollar Faces Challenges Despite Employment Data Releases

Despite mixed employment-related data releases from the US on Wednesday, the US Dollar remained resilient due to risk aversion among investors. ADP Employment Change for November missed expectations at 103,000, and Unit Labor Costs fell by 1.2% in the third quarter. The lack of improvement in risk sentiment supported the US Dollar’s position.

DXY Chart

DXY Chart

EUR/USD Hovers Around 1.0800 as US Dollar Weakens

EUR/USD gained traction during the American session, breaking above 1.0800 and reaching two-day highs. The US Dollar’s weaker stance, coupled with lower Treasury yields, has supported the pair’s upward movement ahead of the Nonfarm Payrolls report on Friday. Technical buyers may become more interested if the pair surpasses the 1.0820 level.

EURUSD Daily Chart

EURUSD Daily Chart

Sideways Trading For Gold and Resistance at $2,040

Gold spot continues to trade sideways without a clear direction in the short term, facing resistance at $2,040. The price movement has been limited by lower Treasury yields, preventing a significant downward move. Despite the negative momentum from the retreats from all-time highs near $2,130, there are indications of consolidation.

XAUUSD Daily Chart

XAUUSD Daily Chart

Market Expectations for Fed and US Dollar

From a fundamental standpoint, the market believes that the Federal Reserve (Fed) will not raise interest rates and anticipates rate cuts in 2024. This follows the trend of other central banks loosening monetary policy. While this sentiment could be negative for the US Dollar, the fundamentals of the US economy, including GDP growth and outlook, remain strong compared to other G10 currencies.

Conditions for Upside Resumption in Gold

To see a resumption of the upside in Gold, there needs to be some weakness in the US Dollar. Additionally, sustained low yields are crucial for supporting the upward movement in Gold prices. These conditions may eventually push Gold back towards its record highs.

Focus on Nonfarm Payroll and US Consumer Price Index

In terms of upcoming data releases, the market’s attention now shifts to Friday’s Nonfarm Payroll report. It is expected to show an increase of 180,000 jobs, which will provide insights into the strength of the labor market. Additionally, next week brings the FOMC meeting, where the Fed will discuss monetary policy, and on Tuesday, the US Consumer Price Index will be released, providing information on inflation trends.


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  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.

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