4 July 2025,02:58
Daily Market Analysis
4 July 2025, 02:58
Key Takeaways:
* US Jobs Data Surprises to the Upside: Nonfarm Payrolls rose to 147K vs. 111K expected; Unemployment Rate improved to 4.1%.
* Dollar Gains Short-Lived: Initial dollar rally fades as focus shifts to U.S. debt sustainability following passage of Trump’s multi-trillion-dollar tax bill.
Market Summary:
Two key macro events drove market volatility on Thursday: a strong U.S. jobs report and the passage of President Trump’s aggressive tax and spending bill, which has reignited concerns over U.S. debt levels.
According to the Bureau of Labor Statistics, U.S. Nonfarm Payrolls unexpectedly rose to 147K in June, slightly above May’s 144K and well above consensus expectations of 111K. The Unemployment Rate also improved, falling from 4.2% to 4.1%. The dollar initially rallied sharply following the release, reflecting optimism over continued labor market strength. Gold prices, in contrast, dipped as risk sentiment improved.
However, the upside momentum in the dollar was short-lived, as investor attention pivoted back to the structural risks tied to the U.S. fiscal outlook.
After days of intense negotiations, Congress passed a multi-trillion-dollar tax and spending bill, representing a significant win for President Trump’s domestic agenda. The bill:
Though it passed narrowly (218-214 in the House), it is expected to be signed into law by President Trump imminently.
But with no clear funding offsets, the bill’s long-term implications are drawing scrutiny. The Congressional Budget Office (CBO) and the Joint Committee on Taxation estimate that the legislation will increase federal deficits by $3.4 trillion over the next decade. Some private economists argue even that figure may understate the true cost.
Should debt levels continue rising, projections indicate the U.S. debt-to-GDP ratio could exceed 118% by 2035, a level that may begin to undermine investor confidence in U.S. Treasuries and the U.S. dollar.
Implications for Dollar
Although the dollar rebounded briefly on the back of strong labor data, concerns over future borrowing needs, higher yields, and political risks could weigh on the greenback moving forward—especially if markets begin pricing in fiscal instability.
Dollar_Index, H4:
The U.S. Dollar Index (DXY) briefly edged higher following the release of stronger-than-expected Nonfarm Payrolls data, providing short-term bullish momentum. However, the rally lost steam after the index tested the key resistance level of 97.35, prompting a pullback as investors reassessed broader fiscal risks—particularly rising concerns over U.S. debt sustainability.
MACD is showing signs of diminishing bullish momentum, indicating a potential loss in upward strength. RSI currently stands at 51, retreating toward the midline, suggesting the index is entering a consolidation phase.
If the index fails to break above 97.35, we may see a modest retracement toward the support zone near 96.50. Conversely, a decisive breakout above 97.35 could pave the way for an extension toward the next resistance at 98.10.
Resistance Levels: 97.35, 98.10
Support Levels: 96.50, 95.75
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