USD Surges on Strong NFP as ECB Rate Hike Decision Looms This Week

The US dollar surged broadly following a robust Non-Farm Payrolls report, reshaping rate expectations ahead of a pivotal week featuring the European Central Bank's anticipated rate hike decision. EUR/USD came under significant pressure as the strong US jobs data reinforced the Federal Reserve's hawkish stance, diminishing prospects for near-term rate cuts. GBP/USD also retreated as dollar strength dominated major pairs, while USD/JPY extended its advance and AUD/USD weakened on the risk-off-for-commodities dynamic. The divergence in monetary policy trajectories between the Fed and ECB is now a central theme — while the ECB is expected to hike rates further to combat persistent eurozone inflation, markets are pricing in the Fed maintaining elevated rates longer than previously anticipated. Key levels to watch include EUR/USD support zones established during the prior week's selloff. Traders should prepare for elevated volatility around the ECB decision, as any hawkish surprise could temporarily offset USD strength in the EUR/USD pair.