The recent jobs report is a mixed bag. While the unemployment rate dropped to 4.1% and more than 140,000 nonfarm payroll jobs were added, half of the job gains were in local and state government. At the same time, jobs in the goods-producing sector fell. This situation complicates any potential interest rate cuts due to possible inflation risks linked to tariffs.

US Yields Rise

US yields are on the rise. The two-year yield has gone up by 9.1 basis points to 3.8799%, after dropping to 3.697% earlier this week. Meanwhile, the 10-year yield increased by 4.1 basis points to 4.339%, after hitting a low of 4.187%. The recent market movements reflect a response to this mixed data. After the US job numbers were released, the euro-dollar pair first dipped but then reversed back up before dropping again. This erratic movement highlights uncertainty, showing that traders are still trying to figure out what the data really means. The price has moved through the levels from 1.1753 to 1.17688 multiple times, establishing this range as an important pivot point. We’re right to monitor this area closely for short-term decisions. Each time it interacts with the 100-hour moving average, it shows there is no strong bias forming yet. The market hasn’t decided which direction to take. In the dollar-yen pair, the situation is more stable. After peaking at 145.22, the pair eased back but not significantly. Finding support at the 200-hour moving average and holding near the 50% retracement indicates that buyers are still active, even if cautiously. If the pair surpasses this week’s high, it will likely attract more attention.

Understanding the Data Analysis

Looking at the job data, the initial figures seemed promising, which led to swift reactions in the market. However, as we examined further, we found that many of the new jobs were in government sectors, particularly at state and local levels. This suggests that the report isn’t just reflecting strong private sector growth but could be driven by temporary changes or policies. Additionally, the decrease in goods-producing jobs raises concerns. This report comes at a time when policymakers are feeling pressured to ease monetary policy, but looming inflation risks—partly due to imposed tariffs—make the timing uncertain. This is why the increase in short-term yields is significant. The two-year yield has surged sharply after an earlier dip, indicating that expectations for interest rates have changed. A quick adjustment in short-term debt pricing shows a shift in confidence regarding how soon interest rate cuts might happen. Long-term rates are also up, with the 10-year yield rising but still lower for the week. This reflects a slower adjustment in long-term inflation expectations compared to short-term predictions. We often analyze the relationship between these yields to gauge market sentiment. When the two-year yield rises faster than the ten-year yield, it usually signals a lower chance of immediate cuts or expectations of persistent inflation. Traders should focus on observing where support and resistance levels hold rather than making guesses. The euro-dollar swing zone continues to act as a key reaction point. The price wants to move but stalls frequently. In the yen pairs, the midpoints and moving averages are playing vital roles. A clear break in these areas could set the stage for the next short-term trends. Currently, the markets show that initial headlines may not present the full picture, so traders need to be prepared for rapid changes. It’s crucial to monitor how yields behave now that the first wave of analysis has concluded. Temporary overreactions in currency markets may reverse as expectations for yields and rates stabilize. Create your live VT Markets account and start trading now.

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