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The U.K. labor market is expected to weaken for the second consecutive month in September, and the rise in unemployment could lead the British Pound to extend the decline from earlier this week as the outlook for future growth deteriorates.

The EUR/USD erased earlier losses as the Fed minutes showed that policy makers were ready to add to their quantitative easing efforts in the near-term if the economy showed signs of weakening. Dollar weakness has driven the pair higher which has seen its correlation with risk strengthen to 65% from 45% a month ago, as equity markets received the boost from the prospect of additional stimulus.

Heightened forex market volatility has led to outperformance in our volatility-friendly Breakout strategies, and elevated expectations for large price moves suggests such systems may continue to do well. Our DailyFX Volatility Indices, which measure implied volatility levels from FX Options prices, recently hit their highest levels in the past quarter on pronounced US Dollar moves. We have subsequently little reason to deviate from our existing strategy biases.

The EUR/USD has seen its month long rally slow as speculation grows that the FOMC may not be on the door step of added stimulus. The Fed announcing that it stands ready to do whatever it takes to ensure that growth continues and deflationary pressures remain at bay, sparked broad based greenback weakness- driving the pair higher.

Jobless claims in the U.K. are expected to rise 4.5K in September after climbing 2.3K in August, according to the median number of economists surveyed by Bloomberg News.

The U.S. dollar continued to bounce back against most of its major counterparts on Tuesday, with the EUR/USD slipping to a low of 1.3886, and the greenback is likely to face increased volatility throughout the day as the Federal Open Market Committee is scheduled to release its policy meeting minutes at 18:00 GMT.

See what comments have been hitting the wires and moving markets today….

Is the dollar index in the process of carving out a base finally or simply in a period of consolidation, look inside to find out…

Tuesday is feeling more and more like a reversal day, and we could very well see some broad based profit taking of currency long positions back in favor of the Greenback.

In the push-pull battle between a brightening economic outlook and profit taking, the latter won out—at least in the case of crude oil. For gold, the pattern was the same, with the metal notching yet another record high.