Summary of the Article: USD/JPY, EUR/USD Outlook: Energy Edge Meets Labour Market Test
Author: David Scutt, Market Analyst
Date: 02/03/2026
Overview
The article discusses the current dynamics in the foreign exchange (FX) market, particularly focusing on the USD/JPY and EUR/USD currency pairs. It highlights how rising geopolitical risks, particularly related to energy supply, are influencing currency valuations. The upcoming US labor market data is anticipated to play a crucial role in determining the dollar's performance.
Energy Shock Favors the USD
With the surge in oil and gas prices, a significant divide has emerged between energy importers and producers. European energy prices have skyrocketed, leading to increased costs for import-dependent economies. This situation has bolstered the USD, which is seen as a safe haven amidst these energy security concerns.
Economic Resilience
The article notes that the February ISM manufacturing PMI exceeded expectations, indicating economic resilience in the US. The prices paid component of the PMI also rose sharply, suggesting inflationary pressures are building. This economic strength has led to a bullish sentiment in the markets, with rising yields and a reduced expectation for Fed rate cuts.
Labour Market Data as a Key Variable
The upcoming labor market data, particularly the nonfarm payrolls report, is highlighted as a critical factor for the USD's performance. Strong labor data could reinforce the narrative of inflation coupled with growth, while disappointing figures could reignite fears of an economic slowdown.
Impact on EUR/USD and USD/JPY
The article discusses the technical outlook for EUR/USD, indicating a bearish trend with lower highs and lower lows. The USD/JPY pair is at a critical juncture, with a potential breakout above 157.50 that could lead to further gains for the dollar. However, a failure to maintain this level could result in a downward shift.
Conclusion
In summary, the article emphasizes the interplay between energy security, economic data, and currency valuations. The USD is currently favored due to its relative strength amidst rising energy prices and economic resilience, but upcoming labor market data will be pivotal in shaping future trends.