The euro and the British pound maintain their prospects for further gains against the US dollar. The Japanese yen appreciated significantly today, as traders believe the Bank of Japan will raise interest rates this week.
Meanwhile, statements from Federal Reserve officials at the end of last week did not help the US dollar, so the chances of further growth in risk assets remain quite good. Traders are closely monitoring any signals that may indicate a change in the Fed's monetary policy, and in the absence of convincing arguments for maintaining a tight stance, the strengthening of risk assets may continue. Technical analysis also indicates potential for growth. The breaking of key resistance levels and the formation of upward trends signal strong buying pressure.
Today, in the first half of the day, data on Germany's wholesale price index for November and the changes in industrial production in the Eurozone for October are expected. Analysts and traders will closely examine these data, as they may provide valuable hints regarding the current state of the European economy.
The German wholesale price index, in particular, is an important indicator of inflationary pressure. If it shows an increase, this may heighten concerns about inflation in the Eurozone and push the European Central Bank toward a more cautious position. Meanwhile, data on Eurozone industrial production is essential for assessing the region's overall economic health. An increase in industrial production indicates strengthening of the economy, which is unlikely to be expected. However, a slowdown in growth may indicate risks of a weaker year-end.
As for the pound, there are no significant reports scheduled for the UK today, so buyers will have every chance of returning to a bullish market. The lack of economic news from the United Kingdom leaves the market room for speculation and a potential strengthening of the British pound, especially if overall sentiment in the currency markets remains favorable for risk assets. In the absence of domestic drivers, the GBP/USD rate will largely depend on external factors, including the dynamics of the US dollar, global economic trends, and geopolitical risks.
If the data aligns with economists' expectations, it's better to act based on the Mean Reversion strategy. If the data significantly exceeds or falls short of economists' forecasts, the Momentum strategy should be utilized.
Momentum Strategy (Breakout):
For EUR/USD
- Buy on the breakout of 1.1748, which may lead to the euro rising toward 1.1777 and 1.1815;
- Sell on the breakout of 1.1725, which may lead to a decline toward 1.1710 and 1.1680;
For GBP/USD
- Buy on the breakout of 1.3374, which may lead to the pound rising toward 1.3402 and 1.3434;
- Sell on the breakout of 1.3343, which may lead to a decline toward 1.3316 and 1.3287;
For USD/JPY
- Buy on the breakout of 155.30, which may lead to the dollar rising toward 155.75 and 156.15;
- Sell on the breakout of 155.05, which may lead to dollar sell-offs toward 154.77 and 154.45;
Mean Reversion Strategy (Pullback):
For EUR/USD
- Look for short positions after a failed breakout above 1.1749 on a return below this level;
- Look for long positions after a failed breakout below 1.1724 on a return to this level;
For GBP/USD
- Look for short positions after a failed breakout above 1.3380 on a return below this level;
- Look for long positions after a failed breakout below 1.3345 on a return to this level;
For AUD/USD
- Look for short positions after a failed breakout above 0.6660 on a return below this level;
- Look for long positions after a failed breakout below 0.6640 on a return to this level;
For USD/CAD
- Look for short positions after a failed breakout above 1.3775 on a return below this level;
- Look for long positions after a failed breakout below 1.3756 on a return to this level;
