Forex Trade Setups – May 3, 2025 (Post-NFP Update)

Forex Trade Setups – Post NFP Update The U.S. labor market surprised modestly to the upside in April, with Nonfarm Payrolls rising by 177,000—comfortably above expectations but insufficient to derail Fed rate cut bets for the second half of the year. The report triggered a brief U.S. Dollar rebound, but the Greenback failed to hold above key technical levels, particularly the 100.00 barrier on the Dollar Index. This suggests traders remain sensitive to broader growth risks and hesitant to abandon easing expectations, especially as wage growth cooled and global macro headwinds persist. Meanwhile, the Japanese Yen remains structurally weak following the Bank of Japan’s dovish policy hold and downgraded economic forecasts. This has left the yen vulnerable across the board, particularly against higher-beta currencies like the pound, which continues to benefit from improved risk sentiment tied to de-escalation hopes in U.S.-China trade tensions. However, sterling’s strength is capped by firm expectations that the Bank of England will cut rates next week, placing renewed focus on cross-market plays such as GBP/JPY rather than directional bets against the dollar. Technical dynamics across major pairs reflect a market searching for post-NFP clarity, with the USD/JPY breakout consolidating above 145, while EUR/USD and USD/CAD coil near key moving averages. GBP/USD, however, has lost momentum, retreating from session highs and reflecting the growing divergence between Fed and BoE trajectories. Forex Trade Setups – Post NFP Update: Rank Pair Direction Entry Stop Loss Take Profit Rationale Confidence Reason 1️⃣ USD/JPY Buy on breakout 145.20–145.40 144.25 146.50 – 147.00 BoJ dovish policy intact, Fed rate cut repricing slows. NFP beat keeps yields supported; USD/JPY recovers from intraday dip. Bullish momentum sustained above Fib levels; yield support intact; BoJ credibility fading. 2️⃣ GBP/JPY Buy on dips 192.20–192.40 191 194.50 – 195.80 Despite GBP/USD weakness, JPY remains under pressure. GBP/JPY remains in breakout mode above 100-EMA. JPY weakness dominates; GBP resilient on trade optimism; RSI cooling supports second leg higher. 3️⃣ USD/CAD Sell on rallies 1.3840–1.3860 1.392 1.3780 – 1.3740 USD/CAD rejected at EMA; oil/stocks supported. CAD buoyed by risk-on mood, while USD struggles to sustain post-NFP gains. Momentum remains bearish; resistance at EMA confirmed; broader risk tone CAD-supportive. 4️⃣ EUR/USD Buy on pullback 1.1280–1.1300 1.1245 1.1380 – 1.1440 Despite NFP beat, EUR holds above key SMA. DXY capped below 100; Eurozone inflation softness already priced. DXY rejection from 100 confirms buying dips is preferred; Fed cut expectations linger. 5️⃣ GBP/USD Avoid for now — — — GBP surrenders intraday gains as BoE cut expectations firm. Bullish structure under threat; USD strength returns post-NFP. Diverging policy outlooks intensify; GBP soft across board; prefer clarity post-BoE next week. Macro & Technical Summary – Post-NFP Context USD/JPY regains top confidence rank as Friday’s NFP beat removes immediate rate cut panic but leaves yields supported. While monthly wage gains softened, job creation remained healthy, reinforcing market repricing. Technically, the pair holds above the 38.2% Fib and 145.00 psychological level. BoJ’s credibility gap and soft inflation forecast continue to anchor JPY weakness. GBP/JPY remains constructive, though slightly re-positioned lower after GBP/USD reversed intraday strength. Risk appetite and JPY softness keep this cross elevated, but caution is warranted near 193.75 resistance. The RSI cooling from overbought levels supports tactical dip buys. USD/CAD continues to offer downside potential amid consistent rejection at the 9-day EMA. Broader commodity strength, stable Canadian macro backdrop, and USD fragility outside of NFP gains support a contrarian short stance. Bearish trend remains valid below 1.3860. EUR/USD held above its 21-day SMA and remains biased higher despite limited NFP downside. DXY’s failure to break 100 adds conviction to dip-buying strategies, especially with ECB dovishness priced in and macro data now secondary to Fed rate path clarity. GBP/USD loses its bullish edge short-term as strong NFP offsets recent USD softness. A BoE rate cut next week is now fully priced, leaving the pair vulnerable. Prefer to re-enter once post-BoE clarity emerges. Summary USD/JPY emerges as the highest-conviction setup, with a clean technical break above 145 supported by BoJ dovishness and stable U.S. yields. Near-term dips are seen as buying opportunities, with targets toward 147.00. GBP/JPY remains supported by yen weakness and constructive risk sentiment. The overbought condition has partially eased, favoring tactical dip-buys while the cross holds above 192.00. USD/CAD continues to exhibit a bearish technical profile. Despite post-NFP dollar strength, the pair remains capped by resistance at 1.3860. A break below 1.3780 would open the door to fresh multi-month lows. EUR/USD retains its bullish structure above the 21-day SMA. The NFP beat failed to break the pair lower, and a softer Dollar Index continues to support long setups toward 1.1440. GBP/USD has been downgraded from actionable setups. While trade optimism helps sterling hold above 1.3260, BoE rate cut bets and USD stabilization cap the upside. A re-entry may be considered post-BoE decision next week. In aggregate, the current environment favors FX strategies focused on policy divergence and risk-adjusted relative strength—particularly in yen crosses and commodity-linked pairs—while remaining selective on direct USD exposure ahead of key central bank meetings. 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