06.04.202610:14 Forex Analysis & Reviews: US labor market in good shape

Last Friday, the US dollar surged after reports that payrolls resumed growth in March and the unemployment rate unexpectedly fell.

According to Bureau of Labor Statistics data released Friday, nonfarm payrolls rose by 178,000 last month, the strongest print since late 2024 after revisions showed a deeper decline in February. Economists broadly expected employment to rebound in March following a strike by more than 30,000 healthcare workers and severe winter weather that contributed to a sharp February decline. The firm payroll gain will likely increase the Federal Reserve's focus on inflationary risks amid a rapid rise in energy prices driven by the war in Iran.

The Fed's reaction to the fresh labor market data will be a key factor for financial markets next week. Strong employment readings could push the Fed toward more aggressive action to counter inflationary pressure and the amplified rise in energy prices. That, in turn, could raise borrowing costs for businesses and consumers and further strengthen the dollar.

The Iran war, now just over a month old, remains a major source of uncertainty for global markets. The sharp oil price spike caused by geopolitical tensions undermines efforts to stabilize the US economy and presents central banks with the difficult task of balancing support for growth against inflation control. Market participants will be watching developments in the Middle East closely.

Overall, Friday's US labor data pointed to solid dynamics, underscoring the complex interaction between growth, inflation, and geopolitical factors. The durability of the current dollar strength and its global implications will depend on Fed decisions and how the Middle East situation evolves.

Meanwhile, the unemployment rate fell to 4.3%, although that partly reflects Americans leaving the labor force. The employment-to-population ratio declined to 61.9% in March, the lowest since 2021. The employment rate for 25–54-year-olds (prime-age workers) also fell. The number of people working part time for economic reasons rose.

As for the EUR/USD technical analysis, buyers should consider taking 1.1540. This will mak it possible to target a test of 1.1590. If successful, the euro could extend gains to 1.1630, but doing so without support from large players will be difficult. The most distant target is the high at 1.1662. On the downside, I would expect meaningful buyer activity only around 1.1510. In case of muted interest there, it would be prudent to wait for a break of the 1.1485 low or to open long positions at 1.1445.

Regarding the current GBP/USD technical setup, pound buyers need to take the nearest resistance level of 1.3230. This will make it possible to target 1.3260. Breaking above that level may prove difficult. The next major target is around 1.3300. On a decline, bears will attempt to seize control of the market at 1.3200. If they succeed, a break of that level would deal a serious blow to bulls and push the British currency down to a low near 1.3160, with scope to reach 1.3130.