The U.S. dollar surged against a range of risk assets as the key figures in June's employment report convinced the Federal Reserve that there is no need to lower interest rates later this month and that it can confidently hold off on such decisions until the fall.

According to data from the Bureau of Labor Statistics, U.S. employers added 147,000 jobs last month, surpassing forecasts, while the unemployment rate fell to 4.1%. Economists are divided on how to interpret the report. Some argue that a resilient labor market reflects a strong economy, allowing the Fed to continue its fight against inflation. Others caution that an aggressive policy stance could slow economic growth and potentially trigger a recession. The report also noted wage growth, albeit at a slower pace than in previous months. This may indicate that labor market-driven wage pressure is easing, which could help reduce inflationary burdens. However, if wages continue to rise, businesses may pass these costs on to consumers, perpetuating inflation.

These impressive headline numbers mask weaknesses in private payrolls and other potential red flags for the labor market. "The headline looks a lot better than the details," analysts at RSM US noted. Still, the data generally supports the Fed's view of a slowing yet resilient economy, which does not currently warrant policy intervention.

As I mentioned earlier, the report gives Fed Chair Jerome Powell the opportunity to adopt a wait-and-see approach to policy easing, allowing policymakers to take a summer break.

In response, U.S. Treasury bonds fell, the dollar strengthened, and interest rate swaps showed traders quickly abandoning bets on a rate cut at the Fed's July meeting. Yields on 2-year Treasury notes — which are more sensitive to monetary policy shifts — jumped to their highest level in nearly two weeks.

As a reminder, Fed policymakers have kept the central bank's key rate unchanged this year, citing the potential for President Donald Trump's tariff policy to add inflationary pressure. Officials also pointed to the overall stability of the labor market to support their view that there's no rush to cut rates.

Atlanta Fed President Raphael Bostic echoed this sentiment. "I believe a period marked by such widespread uncertainty is not the time for major changes in monetary policy," Bostic said. "This is especially true given the still-resilient macroeconomic backdrop, which gives us room to maneuver."

It's worth noting that the Fed's wait-and-see stance has drawn criticism from Trump and several officials in his administration, who argue that the central bank should be cutting rates. They have pointed to inflation data, which has generally shown a muted response to Trump's tariff policies.

It is now clear that traders will shift their focus to upcoming inflation reports — starting with the June figures due for release on July 15.

As for the current technical picture of EUR/USD, buyers need to push above the 1.1790 level. Only then can they aim for a test of 1.1825. A further move toward 1.1866 is possible but would be difficult without support from major players. The furthest target would be the 1.1910 high. In the event of a decline, I expect significant buyer activity only near the 1.1750 level. If there is no interest there, it would be better to wait for a retest of the 1.1715 low or consider long positions from 1.1675.

As for the GBP/USD technical picture, pound buyers need to break through the nearest resistance at 1.3675. Only then can they aim for 1.3705, above which it will be quite difficult to gain further momentum. The furthest target would be the 1.3746 level. If the pair falls, bears will try to regain control at 1.3635. A successful break of this range would deal a serious blow to bulls and push GBP/USD toward the 1.3600 low, with a potential move to 1.3565.