Market Analysis: Dollar Corrects ahead of Jerome Powell's Speech

Last week's weak jobs report contributed to a sharp rise in major currencies against the US dollar. Market participants assume that weak labour market data will force the Fed to change the vector of monetary policy. We will find out how officials perceived the recent data in the coming trading sessions. There are a number of speeches scheduled by important US officials this week that could either reinforce current market sentiment or contribute to a reversal.

GBP/USD

The British currency strengthened over 200 points last week and traded above 1.2400 on Monday. However, buyers have not yet managed to develop a full-fledged upward trend, and yesterday the price returned below 1.2300.

In the near future, the price may test support at 1.2200-1.2180. The behaviour of the pair at these marks will give more clues on its further pricing. A sharp rebound could contribute to renewed growth in the direction of 1.2500-1.2400. A breakdown downward may provoke another downward wave to 1.2100-1.2000.

Today at 11:30 GMT+3, it is worth paying attention to the speech of the head of the Bank of England, Andrew Bailey. Tomorrow at 10:30 GMT+3, a member of the Bank of England Monetary Policy Committee, Huw Pill, will speak.

EUR/USD

The single European currency, like the pound, did not stay above significant levels. Yesterday, the price dropped to 1.0660, but since the pair is still above the alligator lines on the daily timeframe, the chances of renewed growth and a breakdown of the upper fractal at 1.0750 are quite high.

Today at 09:00 GMT+3, we are waiting for the release of data on the consumer price index in Germany for October. A meeting of the Eurogroup is scheduled at 12.00 GMT+3.

USD/JPY

The sharp rise of the USD/JPY pair to 151 was replaced by an equally sharp fall to 149.00. At the beginning of the current five-day trading period, the pair managed to correct and return above the significant level of 150.00.

Today at 14:00 GMT+3, we are waiting for data on the US mortgage lending index from MBA. Also at 16:15 GMT+3, Fed Chairman Jerome Powell will speak. His comments on the Fed's further monetary policy may determine the medium-term trend for the pair.

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