Markets Await NFP as Dollar and Yields Approach Key Turning PointJun 5, 2026

Good morning everyone. It’s Friday, and as you know markets could become quite interesting because we are waiting for the US NFP report for May. This data should be very important in determining whether the Fed could really be looking at another rate hike if jobs continue to hold up, as that would make it easier to fight inflation. On the other hand, policymakers could find themselves trapped if inflation remains elevated while the labor market starts to weaken at the same time. Whatever the outcome, the report will likely have a significant impact on US yields and the US dollar, which may finally trigger moves out of the recent ranges on some of the major FX pairs.

What we have also seen during the Asian session is that stocks moved lower as uncertainty surrounding the US-Iran situation remains elevated. In fact, some of this weakness could also be related to profit taking ahead of today’s important data release. Keep in mind that June can often become a period of consolidation or profit taking after the strong gains seen so far this year, especially as we move into the summer months, so that is something to consider in the weeks ahead.

Looking at the Dollar Index wave count, notice that we remain stuck in a range, although the market has recovered nicely from our supports. However, because this recovery unfolded in only three waves back towards the 99.25 resistance area, it still looks like a corrective move. This suggests that the range may continue for a bit longer, and we could still be forming some type of triangle or even a flat correction if we see another stronger decline in the sessions ahead. In both cases, we continue to view the current price action as a counter trend pause, but one that may not be finished yet.

GH

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