US Dollar looks for support ahead of job data: EUR/USD, USD/JPY, and USD/CAD analysis

• The DXY currently trades ~1.73% higher than multi-year lows made in last week’s trading, now looks for support ahead of Friday’s NFP report
• A somewhat softened stance on tariffs, rumblings of the first successful trade deal, and a calming of Trump-Powell tensions have allowed the dollar to gain ground

The introduction of sweeping tariffs as part of Trump’s notorious “Liberation Day” has been undeniably negative for dollar pricing. Falling to levels unseen since early 2022, markets were quick to offload dollars in favour of other currencies with more stable policy environments.

The future, however, is somewhat uncertain. Agreeing to a temporary deferment in implementing further tariffs, markets are tentatively watching for any developments regarding potential trade deals, with the White House currently hinting that the first deal has been struck.

The $1,000,000 question remains whether Trump’s strong-arm tactics will encourage other nations to reach mutually beneficial trade agreements with the United States, with the last few weeks providing a glimpse of the alternative.

Speaking today at a rally in Michigan marking 100 days in office, Trump has recently renewed criticism of the Federal Reserve, and by extension, Chair Jerome Powell.

A relationship marred by potshots from both parties, Trump has long argued that the Federal Reserve should cut rates more aggressively to stimulate economic growth, a request that has, at least so far, fallen on deaf ears, with the Federal Reserve yet to cut in 2025.

With Trump, perhaps more optimistic than most regarding the current US economy, it would seem that Powell and the Federal Reserve have different priorities for current monetary policy, voting for a more conservative and calculated cutting cycle.

Amid concerns about its autonomy from the White House, the Federal Reserve is set to meet next Wednesday to vote on monetary policy. Traders will closely watch for any commentary suggesting their likely next move.

EUR/USD currently trades around 1.13268, ~2.18% lower in value than recent highs. Trading in a period of consolidation, euro-dollar will have to break and maintain above key resistance at around ~1.13954 to continue the current bull trend, with the next target being around ~1.15182.

At the time of writing, USD/JPY trades above the key level of 143.000 at around 143.050. Unless price can close above the consolidation held between ~143.284 and ~143.836, dollar-yen remains firmly in bearish territory. If price breaks down further, bears will target 142.019.

Recently trading rangebound, USD/CAD has broken previously held consolidation to the downside and now trades at around ~1.37905. The MACD on the four-hourly time frame shows a strengthening bearish trend, with an increasing divergence between MACD and the baseline. If price breaks down further, bears will likely target 1.37528.

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