Dollar Finds Stability Against Euro and Yen Amid Mixed Jobs Report Signals

The U.S. dollar trimmed losses against both the euro and yen on May 3, 2025, as investors digested the latest jobs report and recalibrated expectations for Federal Reserve policy. While the April nonfarm payroll data showed resilience in hiring, wage growth slowed, and downward revisions to prior months clouded the outlook. This mixed bag of signals kept the dollar’s decline in check, but lingering uncertainties about global growth and central bank actions suggest volatility will persist.

Jobs Data: A Glimpse of Resilience, Yet Caution Lingers

The April jobs report revealed 177,000 new nonfarm payrolls, exceeding the 133,000 estimate but falling short of the revised March total of 185,000. The unemployment rate held steady at 4.2%, while average hourly earnings grew 0.2% month-on-month—below the 0.3% consensus. This moderation in wage growth, a key inflation indicator, reinforced concerns about a cooling labor market amid ongoing trade tensions.

Dollar Trims Losses Against the Euro

The U.S. dollar edged higher against the euro, closing at 0.9739 EUR/USD (up 0.33% from the prior day). This modest gain came as the jobs report alleviated fears of an abrupt economic slowdown. Investors parsed the data as a sign that the Fed might delay aggressive easing, though slowing wage growth kept rate-cut expectations alive.

The euro’s retreat was also influenced by the European Central Bank’s (ECB) continued hawkish stance. Despite Germany’s weak Q1 GDP, the ECB’s reluctance to signal rate cuts before September kept the euro from rallying further.

Yen’s Rally Pauses, USD/JPY Stabilizes

The dollar trimmed losses against the yen, closing at 153.0450 JPY/USD after volatile trading. Earlier in the session, USD/JPY dipped to 151.88 JPY/USD—near its lowest level since late 2024—as traders priced in Fed easing bets. However, the jobs report’s mixed signals and a modest rebound in U.S. Treasury yields provided dollar support.

Fundamentally, the yen’s safe-haven appeal remained intact, driven by geopolitical risks and Japan’s inflation resilience (core CPI at 3.2% YoY in March). However, the Bank of Japan’s (BoJ) reluctance to tighten policy contrasted with the Fed’s uncertain path, limiting yen gains.

Technical Outlook: Bearish Pressures, but Dollar Finds Buyers

• USD/EUR: The pair remains trapped between 0.9600 (support) and 0.9850 (resistance). A breach of the latter could signal a broader dollar rebound, but persistent ECB policy uncertainty keeps the euro vulnerable.
• USD/JPY: The 153.00 handle acts as a short-term ceiling, with the 140.792 support level still intact. A breakdown below this could test 2024 lows (139.60 JPY/USD), while a sustained move above 155.00 would require stronger U.S. data.

Conclusion: Dollar’s Fragile Stability

The dollar’s post-jobs report gains were modest but meaningful, reflecting investors’ balancing act between economic resilience and policy uncertainty. Key takeaways:
1. Fed Policy Uncertainty: While the May 7 meeting is all but certain to hold rates, June’s 39.8% chance of a cut keeps the dollar under pressure.
2. Yen Dynamics: The yen’s safe-haven role persists, but BoJ inaction and U.S.-Japan trade talks could limit its upside.
3. Technical Levels: Both USD/EUR and USD/JPY face critical resistance/support thresholds that will define near-term direction.

Investors should monitor the Fed’s May 7 statement closely. A hawkish tilt could push USD/EUR toward 0.9850 and USD/JPY toward 155.00, while dovish signals may reignite declines. For now, the dollar’s stability is fragile—a reminder that in a world of mixed data and geopolitical risks, no currency’s rally is ever assured.