Major Data Ramp Up From Today

UK earnings and jobs data perform well

GBP

The Pound to Dollar rate has so far failed to strengthen further on top of Monday's gains and languishes around $1.2550 in the early Tuesday European session. Data from the UK showed that the unemployment rate edged higher to 4.3% in the three months to March as forecast, failing to trigger any significant reaction.

After some volatility in the latter half of last week, GBP/USD seems to have stabilised above $1.2500 at the beginning of the new week. The near-term technical view fails to offer much in the way of directional clues, while the pair struggles to pull away from the 200-day Simple Moving Average (SMA), currently located at $1.2540.

The dovish tone seen in the Bank of England's (BoE) policy statement following the decision to maintain the bank rate at 5.25% on Thursday made it difficult for Sterling to find demand. The US Dollar (USD) selloff that was triggered by disappointing US data later in the day, however, helped GBP/USD find support and allowed the pair to rise above $1.2500.

Governor Andrew Bailey said that he was optimistic that things were moving in the right direction for a rate cut, adding that they had encouraging updates on inflation.

Major Data: UK Average Earnings, Claimant Count and ILO Unemployment Rate

EUR holding steady, German inflation as expected

EUR

This morning's German inflation figure has done little to excite investors to committing to any particular direction of the Euro, arriving (as expected) at a month-on-month figure of +0.6%. The market reaction from this has been lukewarm, ebbing a little strength from yesterday's gains.

Yesterday, the EUR/USD benefitted from the modest selling pressure surrounding the US Dollar (USD) and closed in positive territory on Monday. The pair stays relatively quiet below $1.0800 early Tuesday ahead of key events due today and later in the week.

The slight improvement seen in risk mood made it difficult for the USD to find demand at the beginning of the week and allowed EUR/USD to stretch higher. Meanwhile, Federal Reserve Vice-Chairman Philip Jefferson said that he was in favour of maintaining current interest rates until there was evidence of moderation in price pressures, helping the USD limit its losses.

Major Data: Germany CPI and Harmonised Index of Consumer Prices, EUR and German ZEW surveys, ECB Schnabel speaks

USD pushed back yesterday but plenty of opportunities to reverse this week

USD

The Dollar was pushed back against majors on heightened selling pressures due to risk sentiment but there are ample opportunities now for the Greenback to stage a reversal this week.

The US Bureau of Labor Statistics will release the Producer Price Index (PPI) data for April later in the session today. Markets expect the PPI to rise 0.3% on a monthly basis following the 0.2% increase recorded in March. A stronger-than-forecast monthly PPI increase could provide a boost to the USD and force EUR/USD to turn south. On the other hand, a soft PPI print ahead of Wednesday's Consumer Price Index (CPI) data could trigger a risk rally, hurting the USD and helping EUR/USD gain traction.

Jerome Powell is scheduled to deliver a speech at 14:00 GMT. If Powell pushes back against expectations for a policy pivot in September, the market positioning suggests that the USD could outperform its rivals. According to the CME FedWatch Tool, the probability of the Fed leaving the policy rate unchanged in September stands around 40%.

Major Data: US Producer Price Index, Powell speech and Cook speech