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The U.S. dollar held firm on Friday, stabilizing against the euro and yen as upbeat economic data and mounting global trade pressures shaped investor sentiment. The currency rebounded from multi-year lows earlier in the week, buoyed by strong nonfarm payroll figures and reduced expectations for imminent Federal Reserve rate cuts.

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Key Currency Movements

• Dollar Index: Recovered after posting its worst first-half performance since 1973
• USD/JPY: Slight dip to 144.69 yen
• EUR/USD: Up 0.1% to $1.1769
• GBP/USD: Up 0.1% to $1.3668
• AUD/USD: Rose 0.1% to $0.6577
• NZD/USD: Climbed 0.2% to $0.608 amid renewed risk appetite

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Policy Signals and Market Outlook

The House of Representatives narrowly passed the “One Big Beautiful Bill,” a major tax-and-spending initiative estimated to add $3.4 trillion to the federal debt. Market participants now await action on President Donald Trump’s July 9 tariff deadline, which targets nations without finalized trade agreements, including Japan.

Economists say these fiscal and trade developments raise concerns over long-term debt sustainability and Treasury market stability.

Meanwhile, the latest U.S. jobs report showed a surprise gain of 147,000 jobs in June, versus expectations of 110,000, reinforcing labour market strength.

Fed rate cut forecasts have been recalibrated:

• CME FedWatch Tool shows a 95.3% probability of no rate change in July
• September or later is now the expected timeline for a potential cut

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Market Sentiment

“Markets are currently embracing solid labour data and betting on new trade deals, despite longer-term fiscal risks,” said Kyle Rodda, senior analyst at Capital.com.

With U.S. markets closed for Independence Day, investors now look ahead to how the tariff rollout and central bank policy will shape cross-border trade and currency flows in the coming weeks.