Today, the euro and the British pound performed well under the Mean Reversion strategy. I traded the Japanese yen using the Momentum strategy.
Data from Berlin showed a decline in the number of unemployed, exceeding analysts' forecasts, which is traditionally a positive signal for the European currency, demonstrating the resilience of the eurozone's largest economy. This was followed by data on France's gross domestic product, which also showed growth—moderate, but above expectations. The combination of these two positive economic indicators boosted interest in the euro, triggering a wave of cautious buying.
Later in the first half of the U.S. session, a number of important macroeconomic indicators are expected, which may significantly impact price dynamics. In particular, data on the Producer Price Index (PPI), which tracks inflationary trends at the production stage, will be released. Alongside the headline PPI, special attention will be paid to the core PPI, which excludes volatile components such as food and energy prices. In addition, investors and analysts will closely monitor the Chicago Purchasing Managers' Index (Chicago PMI). This regional index, reflecting manufacturing activity in the U.S. Midwest, is known for its volatility and its ability to respond quickly to changes in economic conditions. Together, these data will provide an updated picture of the U.S. economy, influencing expectations regarding future Federal Reserve monetary policy and, consequently, the U.S. dollar.
In the event of strong data, I will rely on the Momentum strategy. If the market shows no reaction to the data, I will continue using the Mean Reversion strategy.
Momentum Strategy (Breakout) for the Second Half of the Day:
For EUR/USD
- Buying on a breakout above 1.1810 may lead to growth toward 1.1834 and 1.1857;
- Selling on a breakout below 1.1795 may lead to a decline toward 1.1745 and 1.1725.
For GBP/USD
- Buying on a breakout above 1.3500 may lead to growth toward 1.3535 and 1.3565;
- Selling on a breakout below 1.3470 may lead to a decline toward 1.3449 and 1.3422.
For USD/JPY
- Buying on a breakout above 156.33 may lead to growth toward 156.73 and 157.03;
- Selling on a breakout below 155.96 may lead to a decline toward 155.23 and 154.95.
Mean Reversion Strategy (Pullback) for the Second Half of the Day:
For EUR/USD
- I will look for selling opportunities after a false breakout above 1.1823, followed by a return below this level;
- I will look for buying opportunities after a false breakout below 1.1794, followed by a return to this level.
For GBP/USD
- I will look for selling opportunities after a false breakout above 1.3516, followed by a return below this level;
- I will look for buying opportunities after a false breakout below 1.3454, followed by a return to this level.
For AUD/USD
- I will look for selling opportunities after a false breakout above 0.7135, followed by a return below this level;
- I will look for buying opportunities after a false breakout below 0.7110, followed by a return to this level.
For USD/CAD
- I will look for selling opportunities after a false breakout above 1.3682, followed by a return below this level;
- I will look for buying opportunities after a false breakout below 1.3659, followed by a return to this level.
