NFP Takes Centre Stage as Dollar and Gold Await Direction

Key Takeaways:

*Today’s US Non-Farm Payrolls report is expected to be the key catalyst driving the next major move in both the US dollar and gold.

*USD remained supported by resilient economic data and expectations that the Federal Reserve will maintain a higher-for-longer interest rate stance.

*Fed Chair Kevin Warsh reaffirmed the Fed’s commitment to price stability while signalling that future policy decisions will remain data dependent.

Market Summary:

The US dollar remained broadly supported while gold recovered from recent weakness as investors adopted a cautious stance ahead of today’s highly anticipated June Non-Farm Payrolls (NFP) report, the week’s key market-moving event. Consensus forecasts expect around 110,000 new jobs, with the unemployment rate holding at 4.3% and average hourly earnings rising 0.3% month-on-month. A stronger-than-expected report would likely reinforce expectations that the Federal Reserve will maintain a higher-for-longer policy stance, supporting the US dollar and Treasury yields while pressuring gold and other risk-sensitive assets. Conversely, weaker employment data could revive expectations for monetary easing, weighing on the dollar while supporting gold and broader market sentiment.

The dollar also continued to draw support from Federal Reserve Chair Kevin Warsh’s remarks at the ECB Forum in Sintra. While acknowledging that inflation expectations and price risks have eased in recent weeks, Warsh reaffirmed the Fed’s commitment to restoring inflation to its 2% target and stressed that future policy decisions will remain data dependent. He also announced plans to expand the use of real-time economic data over the coming year to improve the Fed’s policy assessment.

Recent US economic data presented a mixed but generally supportive picture. ADP private payrolls rose by 98,000 in June, below expectations, while Challenger job cuts fell to their lowest level since late 2025, indicating layoffs remain limited. Manufacturing activity stayed in expansion despite moderating slightly, while input cost inflation eased further. Together, these indicators supported the view that the labour market remains resilient and inflation pressures continue to moderate, helping keep the Dollar Index near 101.3–101.4, close to its highest level in over a year. Gold rebounded above US$4,000 after softer employment data and easing inflation expectations reduced concerns over further aggressive Fed tightening. However, persistent dollar strength, elevated Treasury yields, and expectations of higher interest rates continue to limit upside, leaving today’s NFP report as the key catalyst for gold’s next directional move.

Meanwhile, easing geopolitical tensions also influenced sentiment. Progress in US-Iran negotiations and improving shipping conditions through the Strait of Hormuz reduced safe-haven demand after President Donald Trump said talks with Iran were progressing well and highlighted falling oil prices. While reduced geopolitical risks have limited gold’s upside, lingering global uncertainty continues to provide underlying support. In currency markets, the Japanese yen remained under pressure as USD/JPY hovered near 40-year highs around 162.5, keeping traders alert for possible intervention by Japanese authorities.

Technical Analysis

Dollar Index, H4: 

The US Dollar Index (DXY) remains in a constructive uptrend consolidating just below the key 101.85 resistance after its strong rally from the 99.50 support area. Price continues to hold above the ascending trendline and all nearby support levels, suggesting buyers remain in control despite the recent pause in momentum.

Recent price action shows DXY entering a consolidation phase between 101.00 and 101.85 after posting a series of higher highs and higher lows. The ability to maintain gains above the psychological 101.00 level reflects resilient buying interest, while the absence of any significant pullback indicates the broader bullish structure remains intact. A decisive break above 101.85 would likely confirm the continuation of the uptrend.

Momentum indicators remain moderately positive. RSI has rebounded to around 53 after recovering from neutral territory and has crossed above its moving average, indicating improving bullish momentum without approaching overbought conditions. Meanwhile, MACD has completed a bullish crossover just above the zero line, with the histogram turning slightly positive, suggesting that upside momentum is gradually rebuilding following the recent consolidation. Overall, the short-term outlook remains bullish as DXY continues to consolidate near recent highs while holding above key support and its ascending trendline.

Resistance Levels: 101.85, 102.50

Support Levels: 101.00, 100.10

GOLD, H4: 

Gold remains in a broader bearish structure although recent price action suggests the market is attempting to stabilize above the 3,975 support level. After completing an ABC corrective decline from the 4,375 resistance area, buyers have stepped in near recent lows, allowing prices to recover toward the 4,100 resistance level.

Recent price action shows gold forming a series of higher lows after defending the 3,975 support, indicating that selling pressure has eased in the short term. However, price continues to trade below the key 4,100 resistance, meaning the broader downtrend has yet to be invalidated. A sustained break above 4,100 would improve the near-term outlook and expose the next resistance at 4,220.

Momentum indicators are turning more constructive. RSI has risen to around 53 and moved above its moving average, suggesting improving bullish momentum while remaining comfortably below overbought territory. Meanwhile, MACD has completed a bullish crossover below the zero line, with the histogram turning positive, indicating that upside momentum is gradually strengthening despite the broader trend still favoring caution.Overall, the short-term outlook has improved to cautiously bullish as gold rebounds from key support with strengthening momentum indicators.

Resistance Levels: 4100.00, 4220.00

Support Levels: 3975.00, 3935.00