Forex week in review 23/2026: payrolls lift the dollar

The ceasefire optimism of late May faded as US–Iran talks stalled, and a run of strong US data finished with May payrolls of 172,000 against 85,000 expected. The dollar index rose 1.17% to 100.07, USD/JPY closed above 160 and gold fell 4.6%.

Pair	Open	Close	Change	Note
EUR/USD	1.166	1.1521	-1.19%	Closed at the week’s low after payrolls despite a likely ECB hike
GBP/USD	1.3461	1.3341	-0.89%	Swung through a 156-pip range on Friday alone
USD/JPY	159.27	160.32	+0.66%	Closed above 160, the zone where Japan intervened in April
AUD/USD	0.7184	0.7047	-1.91%	Worst of the majors; weak Q1 GDP and a 1.3% Friday fall
XAU/USD	4539.27	4330.13	-4.61%	Hit by higher yields and a stronger dollar

The week of 1–5 June undid most of the dollar weakness of late May. The ceasefire extension reported at the end of May was not confirmed, the Strait of Hormuz stayed largely shut, fighting flared again midweek, and the US economy produced one strong number after another. Friday's employment report capped it: 172,000 jobs in May against a consensus of 85,000.

The Dollar Index (DXY) rose 1.17% to close at 100.07, from 98.91 the previous Friday, according to RTTNews, and touched 100.11 on Friday. The dollar rose against every major, including the yen, and USD/JPY closed the week above 160, the area where Japan intervened at the end of April.

Where the story stood on Monday

Late May had shown what happens to the dollar when peace looks closer: oil fell, inflation fears eased and the dollar slipped, as we covered in last week's recap. The problem was that the reported 60-day ceasefire extension had not been approved. RTTNews noted on Monday 1 June that the extension remained unconfirmed, efforts to reopen the Strait showed little progress, and oil had already jumped again.

So the week started with the late-May optimism on shaky ground and a heavy US data calendar ahead.

Day by day

Monday 1 June: manufacturing surprises to the upside

The ISM manufacturing index rose to 54.0 in May from 52.7 in April, against 53.0 expected, according to Crypto Briefing. New orders rose to 56.8, the employment component improved to 48.6 but stayed below 50, and the prices-paid index eased to 82.1 from 84.6. A prices index above 80 means a large majority of purchasing managers are still reporting higher input costs, which is consistent with the energy shock working through supply chains.

The dollar made its weekly lows on Monday: the Dollar Index at 98.92, EUR/USD at its weekly high of 1.1666 and USD/JPY at its low of 159.25, according to RTTNews.

Tuesday 2 June: job openings jump, mixed Iran signals

The April JOLTS report showed 7.62 million job openings against 6.88 million expected, according to RTTNews. Trading Economics described it as the highest level of openings in nearly two years, with layoffs declining. A high number of openings relative to unemployed workers points to a tight labour market, which supports wage growth and, in turn, keeps pressure on the Fed.

On the diplomatic front, President Trump said negotiations with Iran were continuing uninterrupted, contradicting Iranian media reports that talks had been halted, according to RTTNews. The Dollar Index ended the day roughly flat around 99.21; inflation concerns tied to the continued closure of the Strait limited the dollar's moves in either direction.

Wednesday 3 June: missiles and strikes

According to Trading Economics, US Central Command said Iran launched ballistic missiles toward neighbouring countries, and US forces struck Qeshm Island in response to attempted Iranian attacks. Peace negotiations stalled. The Dollar Index hovered around 99.2, extending the week's gains. Safe-haven demand and the inflationary effect of a longer closure both favour the dollar, which is why escalation has tended to lift it throughout this conflict.

During the week: data outside the US

Euro-area flash inflation rose to 3.2% in May, the highest in over two and a half years and in line with consensus, according to RTTNews. That kept markets confident that the ECB would raise rates by a quarter point on Thursday 11 June.

In Australia, first-quarter GDP rose 0.3% against 0.5% expected, according to RTTNews. After a jump in unemployment in May and softer April inflation, this was another reason for markets to doubt further RBA hikes.

ISM services also came in above expectations, according to RTTNews.

Friday 5 June: payrolls blow the doors off

The May employment report showed nonfarm payrolls up 172,000 against 85,000 expected, with the unemployment rate unchanged at 4.3% and wage growth easing to 3.4%, according to FXStreet. The Dollar Index rallied from a daily low of 99.16 to about 100.10.

In Canada, the economy added 87,800 jobs in May and unemployment fell to 6.6%, according to FXStreet. Even so, USD/CAD rose to about 1.3950, a two-month high. A strong domestic number could not outweigh the US surprise.

According to FXStreet, by late Friday EUR/USD was near 1.1520, GBP/USD near 1.3330, USD/JPY between 160.10 and 160.15, AUD/USD near 0.7040 after a 1.3% fall on the day, WTI near $90.50 and gold near $4,320.

Pair by pair

EUR/USD: 1.1660 to 1.1521 (−1.19%)

This is the clearest example of the week's main lesson. The ECB was all but certain to hike the following week, and euro-area inflation was at a two-and-a-half-year high. The euro still fell 1.19%. Currencies trade on relative expectations. A fully priced ECB hike adds nothing new; a payrolls number twice the consensus changes the expected Fed path. The relative shift favoured the dollar. The pair made its weekly low of 1.1517 on Friday and closed just above it.

GBP/USD: 1.3461 to 1.3341 (−0.89%)

Sterling's Friday was remarkable: RTTNews recorded both its weekly high of 1.3485 and its weekly low of 1.3329 on that day, a range of 156 pips in one session. RTTNews attributed part of the week's weakness to domestic political developments. A range like that around a single release is a reminder that the size of the move matters more than its direction for anyone using leverage.

USD/JPY: 159.27 to 160.32 (+0.66%)

The pair finished the week above 160, with a high of 160.35 on Friday. This is the zone where Japan intervened on 30 April and where, according to market sources quoted by Adnkronos at the end of May, the authorities were believed to have drawn a line. The fundamental driver, the gap between US and Japanese interest rates, widened again after the jobs data. Any long position here carries the risk of a sudden intervention-driven drop. Our guide to support and resistance discusses why levels like this matter even when they are not on a chart.

AUD/USD: 0.7184 to 0.7047 (−1.91%)

The Aussie was the weakest major, falling from a Monday high of 0.7192 to a Friday low of 0.7037. Three forces combined: a stronger US dollar, weaker Australian growth data, and the cooling of RBA hike expectations that had made the currency the best G10 performer earlier in the year. When a currency's interest-rate advantage starts to shrink, the positions built on that advantage tend to unwind together. That is the downside of carry trades.

XAU/USD: 4,539.27 to 4,330.13 (−4.61%)

Gold had its worst week in this run, according to StatMuse daily data. Strong US data meant higher expected rates and a stronger dollar, which together raise the cost of holding a metal that pays no interest. Renewed fighting in the Gulf was not enough to offset that.

The Canadian dollar: good news that was not enough

Friday also offered a neat controlled experiment. Canada's labour force survey and the US employment report were released at the same time, 8:30am New York time. Canada added 87,800 jobs and its unemployment rate fell to 6.6%, a strong report by any standard. Yet USD/CAD rose to around 1.3950, a two-month high, according to FXStreet.

The explanation is again relative. The Bank of Canada had held its policy rate at 2.25% at its previous decision, and the Canadian economy had contracted slightly in the first quarter, so one good jobs report did not change the picture of a cautious central bank. Canadian first-quarter GDP, published on 29 May, showed real output falling at a 0.1% annualised rate after a 1.0% drop in the final quarter of 2025, according to the Bank of Canada's later statement as reported by the Canadian Press. The US report, by contrast, pushed up expectations for a Fed that markets already thought might hike. When two releases land at the same moment, the pair reflects whichever surprise shifts its central bank's expected path more. The currency pairs explained guide covers why every exchange rate is a comparison between two economies, never a verdict on one.

How the week fits the bigger picture

Step back and the five weeks since early May follow one logic. Each time the war looked set to drag on, oil rose, inflation expectations rose, the market priced a more hawkish Fed and the dollar strengthened. Each time a deal looked closer, the reverse happened. This week US data added its own weight to the hawkish side, independent of the war: manufacturing, job openings and payrolls all pointed to an economy that was not slowing much despite energy prices.

That matters for the new Fed leadership. Kevin Warsh, sworn in on 22 May, had not yet chaired a policy meeting. The minutes of the April meeting had already shown a committee split over its easing bias. A jobs report like this one gives the hawks on the committee a stronger argument, and markets were quick to price that in.

Reading a jobs report like a professional

The headline payrolls number gets the attention, but it is only one of three numbers markets react to on jobs Friday:

Payrolls versus consensus. 172,000 against 85,000 is a surprise of 87,000, more than the consensus figure itself. The surprise is what moves price.
The unemployment rate. Unchanged at 4.3% and in line with expectations, so it neither added to nor reduced the surprise.
Wages. Wage growth eased to 3.4%. All else equal, slower wage growth is less inflationary, which slightly softened the hawkish message.

Revisions to previous months matter too, and can change the meaning of a headline. A strong headline with large downward revisions is weaker than it looks. Our guide on how economic data moves forex explains how to read these releases together rather than reacting to the first number on the screen.

Risk: trading the release versus trading the reaction

Jobs Friday is one of the most volatile windows of the month. Spreads widen in the seconds before and after 8:30am New York time, and price can jump through several levels without trading at the ones in between.

Worked example (illustrative): a trader places a buy-stop on EUR/USD 20 pips above the pre-release price, hoping to catch a weak-dollar reaction, and a sell-stop 20 pips below. The number comes out strong, the dollar rallies, and the sell-stop triggers. But the price gaps 8 pips through the trigger before filling, and the spread is three times normal. The trader is already 10 or more pips worse off than planned before the trade has a chance to work. Our guides on order types and slippage cover these mechanics.

The alternative many experienced traders prefer is to wait for the first reaction to settle, let the spread normalise, and decide whether the move is consistent with the rest of the data. Waiting means missing the first part of the move, but it avoids paying the worst execution of the month. Remember that most retail CFD accounts lose money, and high-impact releases are where leverage does the most damage. Size positions so that a gap through your stop is survivable; our position sizing guide shows how.

What this week teaches

A priced-in hike is not a reason to buy. The ECB was about to raise rates and the euro still fell, because the US surprise was bigger.
The narrative can reverse in a week. Late May's ceasefire optimism unwound as soon as the deal failed to materialise.
Data surprises cluster. ISM, JOLTS and payrolls all beat; when several releases point the same way, markets reprice more decisively.
Respect intervention zones. USD/JPY closing above 160 put it exactly where Japan acted before.
Shrinking rate advantages hurt carry currencies. The Aussie's fall shows what happens when the reason to hold a currency weakens.

Scheduled next week (8–12 June)

These dates are for planning; they say nothing about the direction of any move. The outcome is covered in the following week's recap.

Sunday 7 June (evening, European time): Japan revised first-quarter GDP and current account.
Tuesday 9 June: China trade balance, CPI and PPI; ECB President Christine Lagarde speaks.
Wednesday 10 June: US May CPI; Bank of Canada interest rate decision and press conference.
Thursday 11 June: ECB interest rate decision, statement and press conference; US May PPI; US weekly jobless claims.
Friday 12 June: UK monthly GDP for April; University of Michigan preliminary consumer sentiment and inflation expectations for June.
All week: US–Iran negotiations and the status of the Strait of Hormuz.

Sources

Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning

Forex week in review 23/2026: blowout payrolls put the dollar back above 100