Expectations for another rate hike by the Fed surged on Monday after Richmond Fed President Thomas Barkin said that before discussing the possibility of lowering interest rates, there is a need to confirm that inflation will stabilize at the desired value, not only reducing it to the target 2.0%.
The statement also fueled demand for dollar, which may strengthen further today due to macroeconomic statistics. After all, the unemployment rate in the UK reportedly rose from 3.7% to 3.8%, and pound, through the dollar index, will drag euro along with it.
Unemployment Rate (UK):
EUR/USD is currently in a correction, trading near the level of 1.0900. It is now oversold, so there is a chance that a reversal will occur, which will partially offset the decline in the pair.
GBP/USD hitting the local low eased the selling pressure, so there is a chance that breaking through 1.2350 will lead to the gradual increase of long positions. But if the quote stays below 1.2350, the current trend will continue.