The US currency is gearing up for the most important trading session of the current week, and possibly even the month. Today, the US Consumer Price Index (CPI) data for May will be released. Additionally, the Federal Reserve (Fed) has a meeting scheduled today where the base interest rate will be announced, along with the regulator's dot plot forecast for the rest of the year. Considering that last Friday's employment data exceeded forecasts, many investors and experts (according to an FT-Chicago Booth survey) believe that:

• The Fed will reduce rates by only a quarter of a percentage point this year;
• Instead of three cuts, economists and traders are pricing in up to two rate cuts by the end of the year.

Naturally, such hawkish market expectations are likely to support the strengthening of the US currency. However, it should be noted that the dollar is currently at medium- and long-term highs, and the likelihood of a pullback and the formation of reversal patterns is quite high.

USD/JPY

Following the technical analysis of the USD/JPY pair:

• There is a high probability of testing the May high of this year at 157.70;
• Consolidation above 157.70 could contribute to a renewed rise towards the psychological level of 160.00;
• A rebound or a false breakout at 157.70 could contribute to a return to 155.60-154.80.

EUR/USD

The EUR/USD currency pair is under double pressure. On the one hand, the dollar is strengthening after good labour market data in the US, and on the other hand, there is political uncertainty following the European Parliament elections, the results of which were published at the beginning of the week. Where might the pair head in the upcoming trading sessions?

• In case of weak data for the dollar, the price could attempt to close the "price gap" of Monday at 1.0800;
• A break of the important support level at 1.0710 could contribute to a resumption of the downward movement towards 1.0600.

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