Bearish USD Risks Seen Around Today's Data & Events

Powell on DeckLooking ahead today we have plenty to focus on in FX markets with the first of Fed chair Powell’s testimony due, as well as the ADP employment figure and the JOLTS job openings release. FX markets have seen an absence of volatility recently as traders await the next big directional cues. In particular, traders are looking for more clarity from the Fed. Despite its recent insistence that rates will remain high for as long as possible, the current US data soft patch suggests risks of a potential shift in course from the Fed. Traders will therefore be paying close attention to Powell’s comments today for any signs that the Fed’s view has shifted at all.US Jobs in FocusIn terms of jobs data, today’s readings will be used as a gauge ahead of the headline NFP data due on Friday. Given that the labour market has remained so strong in recent months any emerging weakness will certainly be a bearish signal for USD. Indeed, resilience in the labour market has been the cornerstone of the hawkish Fed argument in recent months. If jobs data starts to weaken now, that would certainly reduce a key barrier for cutting rates, again putting USD under pressure near-term. Should we see any strong downside surprises today, USD is likely to trade lower into Friday’s data. On the other hand, any upside surprises today should help USD stabilise ahead of that data.Technical ViewsGBPUSDThe pair continues to push higher following the false downside break of 1.2612, with price now testing above the bear trend line, the focus is on a continuation higher here. 1.2832 will be the next resistance level to note with bulls looking for a breakout towards 1.2992 next. Notably, we have an active buy signal in the Signal Centre today, set at 1.2675 suggesting a preference to stay long here