Dollar Declines Ahead of Employment Report Release

The US dollar is experiencing significant declines as it tests new lows. This trend comes amid signs of slowing economic growth in the United States and the recent implementation of new tariffs on goods imported from China and Canada. Investors have shown disappointment with President Trump's early executive orders, which has resulted in broad-based sell-offs of the dollar.

USD/JPY Overview

At the beginning of the week, sellers in the USD/JPY market managed to break through a critical support level between 149.00 and 148.60. This range had remained unbroken since November of the previous year. After the downward breakthrough, a brief rebound occurred, which led to a retest of the psychological barrier at 150.00.

According to technical analysis of USD/JPY, there is potential for the downtrend to continue towards the 147.00–146.80 range. This prediction is supported by the formation of a bearish engulfing pattern on the daily chart. For this bearish correction scenario to be negated, the currency pair must consolidate above the 150.60 to 150.00 mark.

Several key events are expected to influence USD/JPY pricing in the coming trading sessions:

• Today at 16:30 (GMT+2): US initial jobless claims
• Today at 16:30 (GMT+2): US non-farm productivity
• Today at 21:00 (GMT+2): GDPNow indicator from the Federal Reserve Bank of Atlanta
• Today at 23:30 (GMT+2): Speech by FOMC member C. Waller

USD/CAD Response to Tariffs

The introduction of new tariffs on Canadian goods just two days ago has pushed the USD/CAD pair back towards the range of 1.4550 to 1.4500. Here, dollar buyers struggled to break through this level, and a subsequent pullback from 1.4550 resulted in the formation of a bearish engulfing pattern.

Analysis suggests that a downward correction for USD/CAD may trend toward the 1.4230–1.4170 area. An uptrend could resume if the pair consolidates firmly above 1.4480.

Key events to monitor through the end of the week include:

• Today at 16:30 (GMT+2): Canada’s trade balance figures
• Today at 17:00 (GMT+2): Ivey Purchasing Managers’ Index for Canada
• Tomorrow at 16:30 (GMT+2): US average hourly earnings report
• Tomorrow at 16:30 (GMT+2): Canada’s employment change announcement

In summary, the US dollar is under pressure due to various economic factors and new tariffs, with key employment reports set to potentially influence market trends further.

Dollar, Employment, Tariffs